Post on 01-Oct-2020
Copyright 2017
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Stephen Su
General Director
ITRI Industrial Economics and Knowledge Center (IEK)
22 August 2017
Digital Transformation:
Opportunities and Challenges for Taiwan
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Outline
• Future Trends of Industry Development
• Opportunities and Challenges for Taiwan
• Directions for Taiwan Policy/Strategy
• Conclusion
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New Trends in Digital Economy
Digital Economy
Social Media
Blockchain
Deep Learning
Ecosystem
Industry 4.0 Digital Platform Autonomous Driving
Smart City
Social Innovation
AI
Big Data VR
Agile Digital Journey
Talents
AR
Sharing Multi-ecosystems
Platform Business
Digital Twin
Frenimies
Algorithmic Intelligence
Bimodal
User-centric
Customer Experience
Digital to the Core Interdisciplinary HMI
Digital Ecosystem
Transformation
Crowd Sourcing Partnership
System Integration
New DNA
Soft Power
Asset Efficiency Bots
Cyber Security
Cyber Physical System
Mass Customization
Value Creation
Adjacencies
Social Media
Blockchain
Deep Learning
Ecosystem
Industry 4.0 Digital Platform Autonomous Driving
Smart City
Social Innovation
AI
Big Data VR
Agile Digital Journey
Talents
AR
Sharing
Digital Twin
User-centric
Customer Experience
Interdisciplinary HMI
Digital Ecosystem
Transformation
Crowd Sourcing Partnership
System Integration
New DNA
Soft Power
Bots
Cyber Security
Cyber Physical System
Mass Customization
Value Creation
Digital to the Core
New Emerging Trends
Adjacencies
Partnership with
friends + enemies
Leverage on
existing operational
competencies
Intelligence without
human intervention
Business models
with multiple
ecosystems
Extension from
core competencies
Platform with
business models Mode 1: Operation
Mode 2: Innovation
Source: ITRI/IEK(2017/08)
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Six Pillars of Digital Economy
• High Speed Broadband/ Mobile
Device/Cyber Security • Civil
participation/Digital
human rights • Innovated digital
Service
• Traditional industry
digitalization
• H/W & S/W integration
• Cross discipline
cooperation
• Data Analytics
• AI
Infra-
structure
Service
Model
Digital
Talents
Regulation
Ecosystem
Digital
Economy
• Digital/Virtual World
Regulation
Digital
Rights
Source: ITRI/IEK(2017/08)
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New Paradigm Shifts under Digital Economy
Past Now Digitalization
Service-based
Applications
Production &
Sales
Data Sensing,
connection and
analyzing
Connection, Sensing
Cyber
Security Virus
Detection
Blockchain
security framework Security & Privacy
Total
Solution Hardware
Cost Down
Customization and
integration by s/w
& h/w integration
H/W & S/W integration
User-centric Branding-
defined Spec.
User scenarios and
feedback, sharing
economy
User-needs
Ecosystem
Platform Supply Chain
Stakeholders’
benefits
Value web
Source: ITRI/IEK(2017/08)
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Control Apex of User-centric Ecosystems More than Branding
Supply
Chain
User
System
Note: Only listed selected companies
Source: ITRI/IEK(2017/08)
6 of Top 10
Market Cap
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New Biz Model in User-centric Ecosystems Wool out in dogs, pigs to pay (羊毛出在狗身上,豬來買單)
User-centric Ecosystem
Brand R&D
Manufacturing
Financial
Stakeholder
User
Service
Provider
Data
$$$
Services
Advertising,
Insurance
companies
Source: ITRI/IEK(2017/08)
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Outline
• Future Trends of Industry Development
• Opportunities and Challenges for Taiwan
• Directions for Taiwan Policy/Strategy
• Conclusion
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Taiwan Manufacturing Industry Portfolio (1/2)
(2015) Value Add Ratio %
Capex/Revenue %
Size of the bubble equals
revenue and US$40b.
IC Design (22.1 %)
IC P&T (54.1%)
Foundry (70.2%)
Memory (8.7%)
Large Size Display(21.1%)
PC (68.8%)
Cell Phone (4.4%)
PV (8.0%)
LED(19.0%)
Machine Tool (5.3%)
High Tech Manuf. Equipment
(8.4%) Auto (0.4%)
Petrochemical (3.9%)
Med. Device (0.9%)
Automation (6.4%)
Robot (0.8%)
Mid. & Small Size Display (20.3%)
-10
0
10
20
30
40
50
60
70
80
-5 0 5 10 15 20 25 30 35 40
Manufacturing Industries Value Add
Ratio in 2015: 24.9%
Source: ITRI/IEK(2016/09)
Note 1: x-axle (Capex/Revenue Ratio %) and y-axle (Value Add Ratio %) @2015
Note 2:( ) 2015 Taiwan industry market share worldwide
Note 3:Manufacturing Industries Value Add Ratio in 2015 calculated based on GDP/gross sum of manufacturing value
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IC Design
(22.1%)
IC P&T
(54.1%) Foundry
(70.2%)
Memory
(8.7%)
Large Size Display
(21.1%)
PC
(68.8%)
Cell Phone
(4.4%)
PV
(8.0%)
LED
(19.0%)
Machine Tool
(5.3%)
High Tech Manuf.
Equipment
(8.4%) Auto
(0.4%) Petrochemical
(3.9%)
Med. Device
(0.9%) Automation
(6.4%)
Robot
(0.8%)
Mid. & Small Size
Display
(20.3%)
-1000
0
1000
2000
3000
4000
5000
-10,000 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Personnel Expenses
(US$M)
Taiwan Industry Revenue
(US$M)
Size of the bubble equals
value add and US$50b.
Taiwan Manufacturing Industry Portfolio (2/2)
(2015)
Source: ITRI/IEK(2016/09)
Note 1: x-axle (Taiwan Industry Revenue US$M) and y-axle (Value Add Ratio %) @2015
Note 2:( ) 2015 Taiwan industry market share worldwide
Note 3:Manufacturing Industries Value Add Ratio in 2015 calculated based on GDP/gross sum of manufacturing value
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0
10
20
30
40
50
60
70
80
90
0.00 5.00 10.00 15.00 20.00 25.00 30.00
Controlling User-centric Ecosystem to
Accelerate Innovation Scale-up
Note: Bubble size is market cap. Except for market cap which is as of 2016/09/06, all other financial indicators are 2015 data
Value-Add
(%)
R&D Brand Manufacturing
User-centric
Ecosystem
Source: ITRI/IEK(2016/09)
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Challenges for Taiwan: From 0 to 1, and 1 to N
Horizontal Progress
(Success duplication)
Vertical Progress
(Innovation breakthrough)
0
1
N
• Advanced technology
• Innovated invention
• New business model
• User ecosystem
• Global market
• 1n => 1 Consistency
• 1x1… = 1 Immutableness
• User-oriented technology
• Young start-ups
• Contract manufacturing
1 => 0 (Cost Down)
Challenges of Taiwan
Source: Peter Thiel; ITRI/IEK (2016/09)
• Speed
• Economic Scale
• Globalization
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From “Manufacturing” to “Infofacturing”
Potential
Players:
Terminals & Components
Network
Cloud
System Integration
Model 2:
Original
System
Manufacturing
Quanta,
Hon Hai,
etc.
ODM
OSM (Original System
Manufacturing)
Model 1:
Service-based
Solution
Provider
Advantech,
Delta,
etc.
Solution Provider
Service-based
Solution Provider
Model 4:
Service
Integrator
7-11,
YouBike,
etc.
Service Provider
Service System
Integrator
Applications & Services
Model 3:
Service-based
Brand
Acer, ASUS,
HTC,
etc.
Service-based Brand
Brand
Source: ITRI/IEK(2017/08)
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Outline
• Future Trends of Industry Development
• Opportunities and Challenges for Taiwan
• Directions for Taiwan Policy/Strategy
• Conclusion
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• Leverage existing strengths in innovation and R&D to develop
cutting-edge new product applications and services with global
potential
• Utilize innovative design to market Taiwan
• Promote cross-industry technology integration, with an emphasis
on digitalization, Internet-enablement, smart technology and
environmentally-friendly technology
Taiwan Industry Innovation for Next Stage
Linkage
with the
Future
Linkage
with the
Global
Resources
Linkage
with Local
Communi-
ties
Strengthen the Industrial Competitiveness through Innovation
Focus on Industry Innovation Initiatives
Smart Machinery
Asia. Silicon Valley
Green Energy
Circular Economy
IC Design & Semiconductor
Biotech & Pharmaceutical
National Defense
New Agriculture
Digital Economy
Technology for Culture +1 +2 +2
5
Source: IDB of MOEA;IEK of ITRI (2017/03)
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Digital Nation Strategy: DIGI+ (2017-2025) 6 Key Strategies:
1. Infrastructure for digital innovation (DIGI+Infrastructure)
2. Talents and skills for innovation (DIGI+Talent)
3. Digital transformation for industries (DIGI+Industry)
4. Human rights in open internet and digital society (DIGI+Right)
5. Smart cities with public-private sectors (DIGI+Cities)
6. Digital services and globalization (DIGI+Globalization)
Infrastructure for digital innovation
Regulatory Digital Tech Digital Talent
Environment
Digital Economy Internet Society Digital Government
Ecosystem
Smart Cities
AR/VR/MR &
User Experience
Sustainable Society
Circular Economy
5+N industries New Agriculture
Healthy Food
Open Society
Data Economy
Digital Commerce
Fintech
Application and Services
Source: BOST; ITRI/IEK(2017/08)
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Goals for Asia ● Silicon Valley Development Agency (ASVDA) on IoT & Entrepreneurship
Source: ASVDA(2017/03)
• Connect to Silicon Valley and other global tech clusters
• Develop industries for the next generation
• Become an innovative startup destination for young Asians
Capitals
Talents Research
institutes
Universities
Startups
4. Strategies
3. Links
2. Core Elements
1. Ecosystem
5. Goals
Legal & accounting
services
Enterprises
Testbeds
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Post-IoT era with Artificial Intelligence Integration of Big Data, Computing Power, and User
Experience(Algorithm)
Mainframe
PC
Internet
Mobile Social Cloud Data
IOT (Ubiquitous)
Artificial
Intelligence
1970s 1980s 1990s 2000s 2015s 2020s
Communication-oriented
• Number of Connected Devices
• Amount of Data Generated
(Smart Machine)
Computation-oriented Cognition-oriented
Source: ITRI/IEK(2017/08)
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AI as “X factor” to Enable Digital
Transformation for Taiwan Taiwan publishing Digital Nation Initiatives「數位國家・創新經濟發展方案(DIGI+)」
• “Artificial Intelligence” as the Key Driving Factor for cultivating the
Enabling Technology and Digital Talent
AI as “x factor” to scale-up Taiwan’s strength and to drive the
innovation with S/W & H/W integration by domain knowledge:
• “AI X Smart Transportation”: Smart City application
• “AI X Smart Services”: Converging ICT and service interoperation
• “AI X Smart Manufacturing”: Value-added the manufacturing
intelligence
• “AI-PU Chip”: Enabling AI semiconductor ecosystem
• Others: ”AI X Smart Retail”, “AI X Smart Healthcare”, “AI X Smart
Travel”…etc.
“AI X” would be the key success factor for Taiwan
in the era of digital economy
Source: ITRI/IEK(2017/08)
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Targeting AI-powered Service Sectors
10
20
30
40
50
60
70
80
90
-1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Va
lue
ad
d ra
tion
%
Labor Productivity (Million)
Service Sector Avg. 65.9
Se
rvic
e S
ec
tor
Av
g. 2
.2
Finance & Insurance
Circle Size: Revenue
Retail
Textile
Medical Equip.
Auto & Parts
Medical & Pharmacy
Machinery
Expert Science and technology
Healthcare services
Plastic
Ma
nu
factu
ring
S
ec
tor A
vg
. 5.8
Manuf. Sector Avg. 28.5
Food
Chemicals
Computer & Opticals
: Service
: Manufacturing
Public Services & Military
Transportation & Logistics
Electronic Components
Note: Value add ration=value add/revenue; Labor productivity= Revenue/# of Labor
• AI “Supply”: Electronic components, Computer and Electronics, Machinery
• AI “Demand”: Retail, Financial & Insurance, Medical and Healthcare, Expert
Services
* Listed of AI related service and manufacturing sectors
Source: DGB; ITRI/IEK(2017/08)
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AI-related Ecosystem in Taiwan
Infra.
Tech.
Applica
-tion
Big Data
Computing
Processing
Algorithm
Solution
Platform
• The dominant OEM/ODMs incl.
computer, electronic components,
machinery, mobile devices, IoT etc. OEM/ODM
globalized
supply chain
• Computing system industry incl.
embedded system, x86 computing
system, cloud computing etc.
• Computing semiconductor ecosystem
incl. design and fabrication for
processing, GPUs, MCUs etc. Computing
supply chain
• Open Data: eCom(Elect. Invoice,
Housing price), Biotech(National
health care DB, Biobank), City(ETC、Street Cam, City open data)……etc
• Local features: Traffic behavior,
geographic location, epidemic, Health
care service system…
• Policy: 5+2, Sandbox regulatory, Open
data…
Localized
domain
knowledge
• Leveraging the strengths on OEM/ODMs, localized domain DB(biobank,
Cybersecurity..) and semiconductor for AI-enabled economic transformation
Source: ITRI/IEK(2017/08)
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Solve Local Problem, Happy City, Healthy Economy
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Intelligent Transportation Cases in Taiwan
Today: • 1.5M/day cars
• 14M/day transactions
• 99.97% accuracy
• 2015 ITS World
Congress Industry
Award
Future development • Integrated Smart
Transportation Services
• Customized Business
Model and Services
• Enabling Smart City
• Export Integrated systems
ETC/eTag
4G traffic detector
CHT data management
and analysis
Real-time traffic control
• Other traffic information
• Accident information
(Public sector) Real-time traffic
information App
Complete monitor equipment Analyze traffic flow
Traffic control cloud
Traffic information cloud
4G Traffic Control Initiative
Source: ITRI/IEK(2017/08)
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ITRI Case: Smart Traffic Project for
Intersection Movement Assist (IMA)
Source: ITRI/ICL(2016/09)
Alert Signage Alert HMI
IMA V2V Alert - WAVE/DSRC Wireless
Comm.
- Follow U.S. V2V Mandate
IMA: Warns the driver when it is not safe to enter an intersection, ex. when something
is blocking the driver’s view of opposing or crossing traffic.
IMA R2V Alert - Integrate mmWave Radar
- Integrate traffic controller to
alleviate congestion
IMA Signage Alert - Allow the car without
OBU to access the alert
from outside
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Xiluo, Yunlin: Biggest fruit and vegetable wholesale market with 1/3 share in
Taiwan but serious air pollution and noises from hundreds of diesel trucks.
EVs and services system to solve the local issues with testing and
verification, and to build self-sustain components and maintenance supply
chain.
Export to overseas market with local references(over 800 EVs in Taiwan)
and assembly factory in Philippines
Diesel truck
Electrified truck
Low-speed EV
Southeast Asia- Philippines Central Taiwan-
Xiluo Yunlin
ITRI Case: Green Fleet Solution for Local
Wholesale Market
Source: ITRI/MSL(2016/09)
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• Southeast Asia as the target for Smart City innovation system and service
– Demand survey and market intelligence
– Linkage Taiwan industry to fulfill the local needs by technology
cooperation
• ITRI as the platform to link the overseas government and Taiwan industry by
innovated system and services integration
– ITRI/IEK and GEL built the reference cases in Philippines, Laos and
Vietnam
Demand: Cost of
energy generated by
Diesel engine due to
transportation problem
Solution: Micro-grid
investment and
business model
Demand: Application
Solar demo project
by APO
Solution: MOU
between Taiwan
industry and Power
Corp. solar project
ITRI Case: Smart Energy Solution for
Southeast Asia
Source: ITRI/IEK(2016/10)
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Outline
• Future Trends of Industry Development
• Opportunities and Challenges for Taiwan
• Directions for Taiwan Policy/Strategy
• Conclusion
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Taiwan Needs to be Part of Global Team Only US Can Feature an Entire Team by Itself
Team USA
U.S. Team
Team Europe
International Team vs.
vs.
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Connecting User-centric Ecosystem Meet User Needs & Create Value by System Integration
User
System
Supply
Chain
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Conclusion
• “AI X” as the key driver for new economy
– Data-driven and AI-enabled for value-added service and
manufacturing sectors
– Digital innovation infrastructure and newly start-ups ecosystem
• “User-centric Ecosystem” to create value with system
integration
− Control user-centric ecosystem, open innovation by public-private
sectors, local test-beds for solution trials, service and operational
system verification
• “Smart city” reference cases based on local pain
points and citizens’ participation
– Team-up to solve the local issues, testing/verification and export
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http://ieknet.iek.org.tw/
IEK 2020 Vision: World-class Think Tank to Lead Taiwan Industries in Value Creation
Given the rapid pace of change in cutting-edge technology and industry development, the timeliness and comprehensiveness of the information included in this presentation cannot be guaranteed by ITRI. Users of this presentation shall bear full liability for any injury or loss that may be sustained as a result. The Copyright of this presentation belongs to ITRI and none of this presentation, either in part or in whole, in any form, may be reproduced, publicly transmitted, modified or distributed or used by other means without permission from ITRI.
Thank You
Stephen Su
IEK General Director
stephen_su@itri.org.tw
+886-3-591-2548
Tsu-Yu Chao
IEK Division Director
tychao@itri.org.tw
+886-3-5914586
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Stephen Su General Director
Industrial Economics & Knowledge Center (IEK)
of Industrial Technology Research Institute (ITRI)
Professional Experiences:
Principal, Roland Berger Strategy Consultants, Shanghai
Sr. Director, Consumer Electronics BU, Primax Electronics Ltd., Taipei
Sr. Director, Corporate Development, Primax Electronics Ltd., Taipei
Case Leader, Boston Consulting Group (BCG), Hong Kong
Applications Engineer, Semiconductor Group, Motorola, Phoenix
Professional Specialty:
Strategy, operations Improvement, organization change management, business
process redesign, new product development and marketing, investment due diligence,
manufacturing management
Chairman of Committee on Policy and Legal, Cloud Computing & IOT Association in
Taiwan (CCAT) (2010-Present)
President, Asia Pacific Industrial Analysts Association (APIAA) (2017-Present)
Consultant Committee of Science & Technology Policy Research and Information
Center (2015-Present)
Taiwan Food and Drug Administration(TFDA) Food Safety Technology Project
Performance Evaluation Committee
Ministry of Economic Affairs(MOEA) Industrial Development Advisory Council
Multiple patents in power switching control and mobile phone applications