The electronics industry is more aggressive with respect to investment in R&D than any other industry," explained Joseph Yeh, an Industry Consultant with MIC. "This is one of the reasons why the Taiwanese electronics industry has been able to achieve such international prominence."

Citing further evidence, Yeh noted that the electronics industry posted the second highest average R&D expenditure per enterprise at approximately US$24.5 million, and displayed the second highest R&D strength with 3.5%. R&D strength is defined by annual R&D expenditures as a percentage of revenue.

"The IT industry has always been one of the mainstays of Taiwan's economic growth, accounting for 25% of Taiwan's economic growth rate," added Yeh.

However, out of the six selected industries for the survey, next to the electromechanical and machinery industry, electronics posted the second lowest year-on-year R&D investment growth rate for the first quarter of 2002.

Pointing to certain vulnerabilities in the in Taiwanese electronics industry R&D, Yeh remarked that Taiwan's electronics industry is still largely involved in manufacturing. Most R&D work is related to applications and production, rather than front-end technology research.

"The vast majority of manufacturers find themselves stuck in an environment of low added value and are easily replaced. This will be a major issue in the competition between Taiwan and China following WTO entry," said Yeh.

The survey on R&D expenditures was performed in June of 2002, and covered twelve industries overall, including the chemical, biotechnology, car manufacturing, glass and ceramics, food processing, textile, plastics, wire and cable electromechanical and machinery, rubber, iron and steel, and electronics industries. The sample included 415 public companies with a capitalization of at least US$5.8 million.