Machine-tool producers in Taiwan are developing such state-of-the-art production equipment in cooperation with manufacturers in such high-tech industries as semiconductors, optoelectronics, and TFT-LCD (thin film transistor-liquid crystal display) flat panels.

All-electric plastic- injection molding machines, printed- circuit board (PCB) drilling machines, and thin-film manufacturing process equipment are among the new offerings, which have breathed new life into the island's struggling machinery sector.

Thin Film, Fat Margins

Victor Taichung Machinery Works Co.,, Ltd., one of Taiwan's leading manufacturers of computerized numerically controlled (CNC) machine tools and plastic- injection molding machines, recently debuted a thin-film manufacturing process center. The center has a physical- vapor deposition (PVD) device for the production of electronic-gun sputtering- system products, sputtering- process equipment, and plasma- manufacturing equipment.



Victor Taichung's thin-film manufacturing process center was created by the team at a transformed from a vacuum- equipment panel plant, established in 1998 to assemble electronic-gun sputtering systems on an original equipment manufacturing (OEM) basis. Since 2000, the panel plant has steppeding up its R&D of in sophisticated manufacturing processes.

Over the past few years, Victor Taichung has been honing its ability in to developing machinery utilizing state-of-the-art manufacturing processes, also developed in-house, including unique units/processes processes for the production of aluminum wheels and large-sized optical lenses.

Victor Taichung president Huang Ming-ho says the thin-film manufacturing center is developing sophisticated manufacturing processes and machines used in the production of light- emitting diodes (LEDs) and power integrated circuits (power Ics). Customers include Mosel Vitelic Inc., Wintek Corp., Mospec Technology Inc., Super Nova Optoelectronics Corp., and Exquisite Optical Technology Corp.

More recently, Victor Taichung has penetrated the market for large-sized in-line magnetron sputtering equipment used for the production of film-coated ITO (indium-tin-oxide) glass substrates for TFT-LCD and STN (super-twisted nematic) flat-panel monitors.

Huang notes that some high-tech firms and academic institutescolleges in Taiwan, including Wintec Corp., HC Photonics Co., Ltd., Tatung Co. and National Chung Hsshing University, have purchased the magnetron sputtering machine, which is priced 30% to 40% cheaper than imported models.

Huang says conventional- machinery manufacturers can fast-track their upgrading efforts by cooperating with high-tech firms. He encourages his industry peers to speed up development of front-end production equipment for sixth-generation TFT-LCD panels. At present, most of domestic manufacturers of TFT-LCD panels still import their front-end production equipment.

Aerospace-Llevel Precision

Yeong Chin Machinery Industrial Co., Ltd., one of Taiwan's leading manufacturers of vertical and horizontal machining centers, is aggressively developing all-electric plastic injection molding machines.

Yeong Chin says it has recently completed development of high-precision multi-spindle compound machining centers well-suited for small batch cutting and milling jobs. The new machine can meet the precision machining requirements of the automobile industry. The company says it can reduce machining time by 70% compared with conventional models.

Seeing the promising prospects of the optoelectronic industry, Yeong Chin plans to produce all-electric plastic- injection molding machines. Company vice president Ke Kun-ming says all-electric plastic- injection molding machines are highly accurate, energy- efficient, and environment-ally friendly. The machines are used for the production of many precision optical components, such as digital camera lenses.

Swooping Into the MDP Field

Falcon Machine Tools Co., Ltd., Taiwan's largest manufacturer of computerized numerically controlled (CNC) grinding machines, has developed molecular decomposition processes (MDP) in cooperation with Compositron Corp. of the U.S. The company started volume production of the new units in cooperation with Compositron Corp. this April.

The company has obtained exclusive sales agent right for the distribution of the new machines in the Asian market.

Founded in 1987, Falcon specializes in making milling machines, lathes, machining centers, and grinding machines. Currently the company exports its machines to more than 70 nations worldwide under the 'Chevalier' brand.

Hsu Chao-kuei, vice president of Falcon, says that the new products are mainly sold to the U.S. medical-supply market, but he anticipates strong demand in mainland China. He says the MDP grinding machine is suitable for use in the medical supply, aerospace, and national defense industries, among other sectors with high-precision needs.

Hsu notes that general grinding machines are priced in accordance with market demand, while MDP grinding machines are priced according to customers' production value. He also expects sales of consumables for MDP grinding machines to reach between US$600,000 and US$800,000 per year.

Falcon returned to profitability last year, reversing a big operating loss in 2002. The company earned NT$17 million (US$507,000460 at US$1:NT$33.5) on sales of NT$1.075 billion (US$32.08 million) last year. Thanks to the continual introduction of innovative and state-of-the-art products, the company expects to see substantial earnings growth this year.

The company projects sales of NT$1.3 billion (US$38.8 million) for this year. An institutional investor estimates Falcon will register more than NT$2 (US$0.06) in pretax earnings per share (EPS) this year.

Falcon says it raked in revenue of NT$285 million (US$8.5 million) in the first quarter of this year, up 35% from the corresponding period of last year. The company boasts it has so far this year received NT$500 million (US$14.92 million) worth of orders, which will keep its production lines busy for at least another three months.

The company says it completed a second-phase expansion at its mainland factory in the beginning of this year. The mainland facility will see sales reach RMB120 million (US$3.58 million) this year, up 65% from last year's RMB72 million (US$2.14 million).

Boosting Demand

Edward Yang, chairman of the government-backed Precision Machinery Research and Development Center (PMC), urges domestic manufacturers of high-tech products to procure domestically made precision production equipment so that the machinery industry can develop.

Yang, also chairmaen of both Goodway Machine Corp. and Awea Mechantronic Co., says the domestic machinery industry has made great achievements in transformation over the past several years with average of annual sales increasing by 20% and 30%. The successful transformation of the machinery industry has strengthened domestic manufacturers of production equipment for automobile parts and boosted their competitive edge.

Although the domestic machinery industry currently exports 70% of its output, domestic manufacturers of high-tech products still heavily rely on the imports of foreign-made products. In fact, Yang says, many domestic machinery manufacturers have accumulated much experience in making sophisticated machines to fillt the need of foreign high-tech industry. For instance, Awea sold machinery worth over NT$200 million (US$5.97 million) to high-tech firms in South Korea in the first half of this year.

Yang says Awea has sold high-precision machines to the satellite factories of such large-sized TFT-LCD panel firms of South Korea as Samsung Electronics. However, Samsung claims it will increase the ratio of self-made production equipment to overall procurement to 80% in 2008, compared to 30% at present. Yang therefore calls on domestic high-tech firms to procure domestically made production equipment so as to elevate their international competitive edge.