VZCZCXRO0876
RR RUEHCN RUEHGH RUEHVC
DE RUEHIN #1131/01 1410541
ZNR UUUUU ZZH
R 210541Z MAY 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 5316
INFO RUEHOO/CHINA POSTS COLLECTIVE
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 TAIPEI 001131 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/TC 
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT 
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN/MCHOI 
TREASURY FOR OASIA/LMOGHTADER 
 
E.O. 12958: N/A 
TAGS: ECON EIND TSPL TPHY TW
SUBJECT: NANOTECHNOLOGY - CAN IT KEEP TAIWAN COMPETITIVE? 
 
 
¶1. (U) Summary: Taiwan initiated a six-year plan to 
develop nanotechnology in 2003 with total funding of 
US$555 million.  The plan emphasizes identifying 
industrial applications more than pure research.  It aims 
to assist Taiwan's successful high-tech firms as well as 
firms in mature manufacturing industries identify new 
applications to stay competitive.  Taiwan's high-tech 
firms, especially in semiconductors, already invest large 
sums in advanced nanotechnology research and will 
continue to successfully use the results of their 
research to stay competitive.  Efforts to help firms in 
mature industries have been less successful so far.  End 
summary. 
 
A Six-Year Plan to Develop Nanotechnology 
----------------------------------------- 
 
¶2. (U) In 2003, Taiwan began a six-year effort to boost 
the commercial use of nanotechnology and graced it with 
the inelegant title of National Science and Technology 
Program for Nanoscience and Nanotechnology (NSTP).  Its 
three major goals are academic excellence in basic 
nanotechnology research, the creation of innovative 
industrial applications, and the acceleration of 
commercialization of nanotechnology.  Taiwan's Executive 
Yuan budgeted US$555 million across the plan's six years 
to be administered by the National Science Council.  The 
nanotechnology initiative ranks high among the projects 
administered by the National Science Council.  Only 
programs on telecommunications, genomic medicine and e- 
learning have been allotted more funding. 
 
¶3. (U) Measured in dollars, the Program places more 
emphasis on industrialization and commercialization of 
nanotechnology than on education and basic research. 
Over the six-year life of the program, 63 percent of the 
budget will be spent on developing industrial 
applications.  The vast majority of this funding is 
directed to the Nanotechnology Research Center (NTRC) at 
Taiwan's Industrial Technology Research Institute (ITRI). 
ITRI is the quasi-governmental research facility that has 
been instrumental in Taiwan's notable success in 
developing the semiconductor, flat-panel display and 
other high-tech industries.  Education and basic 
research, on the other hand, account for just 21 percent 
of the program's budget.  The remaining 15 percent is 
dedicated to the creation of "core facilities," or 
laboratories to be shared by various companies and 
academic institutions.  Within the budget assigned to 
core facilities, approximately 60 percent is earmarked 
for industrial use compared to 40 percent for academic 
use. 
 
¶4. (SBU) Su Tsung-tsan, the General Director of ITRI's 
NTRC told us NTRC aims to help Taiwan's most advanced and 
successful industries, especially semiconductor and flat- 
panel display manufacturing, to develop nanotechnology 
applications.  At the same time, it aims to help more 
mature, less technology-intensive manufacturing 
industries identify nanotechnology applications that will 
help keep them competitive in global markets.  NTRC 
focuses on nanotechnology applications in five areas: 
information and communications technologies, including 
semiconductor memory applications and flat-panel display 
components; energy applications; nanomaterials; 
biomedical applications; and nanotechnology equipment and 
tools. 
 
Progress So Far - Leaders Stay Strong,... 
----------------------------------------- 
 
¶5. (SBU) Taiwan's most advanced industries will continue 
developing nanotechnology to stay competitive, especially 
in the semiconductors field.  Denny Tang, the Director of 
Exploratory Research at Taiwan Semiconductor 
Manufacturing Company, pointed out to us that 
nanoelectronics, including semiconductors, is the only 
profitable nanotechnology industry in the world.  TSMC, 
the world's largest contract semiconductor manufacturer, 
spent over US$480 million on research and development 
last year.  Tang told us that TSMC receives no government 
funding for nanotechnology research and development. 
However, NTRC's Su explained that TSMC and NTRC cooperate 
 
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on some research projects, such as development of 
magnetoresistive random access memory (MRAM). 
 
Older Industries Try to Keep Competitive,... 
-------------------------------------------- 
 
¶6. (U) Taiwan has had mixed results at using 
nanotechnology to help firms in more mature manufacturing 
industries stay competitive.  Taiwan Fluorescent Lamp 
Company (TFLC) started working with the Chung-shan 
Institute of Science and Technology in 1996 to develop 
nanotechnology applications.  In 1999, it created a 
fluorescent tube with a nanomaterial coating that kills 
microorganisms and reduces air odors.  Later it added a 
fan to the light to create an air purifier.  TFLC plans 
to begin marketing the air purifier in the United States 
next month under its own "Nanobreeze" brand name. 
Initially, it plans to ship 50,000 units. 
 
¶7. (U) To assist in the marketing of nanotechnology 
products to consumers in Taiwan, the NSTP established a 
special "nano" mark certification.  Companies can submit 
their new nanotechnologies to NSTP.  If NSTP verifies 
that the product uses nanotechnology, the company can use 
the "nano" mark and its logo to market the product.  TFLC 
is the only company to receive approval to use the "nano" 
mark for two different products, the anti bacterial 
fluorescent tube and the air purifier. 
 
¶8. (SBU) However, Hank Chou, the Nanotechnology 
Department Manager at TFLC, told us that his firm had 
given up marketing nanotechnology products in Taiwan.  He 
complained that it was too difficult to convince Taiwan 
consumers of the benefits of nanotechnology.  Currently, 
the firms nanotechnology products account for only three 
to five percent of total revenue, he said.  The firm as a 
whole has been suffering and was recently in the news 
when the Chairman and President both resigned due to 
financial problems at the firm.  Chou told us that TFLC 
is looking for an investor to take over the company. 
 
...and Struggling to Create New Niches 
-------------------------------------- 
 
¶9. (SBU) When we asked NTRC's Su to suggest a company 
that been successful at developing new nanotechnology 
applications, she identified Novax Material and 
Technology Inc.  Novax had recently unveiled an emergency 
escape fire hood that uses nano gold catalysts to convert 
toxic carbon monoxide to carbon dioxide.  Novax President 
Nano Yang showed us a mock-up of the mask and told us the 
firm would begin manufacturing in July.  His target 
customers are hotels, and the masks will sell for 
approximately US$150 each.  (Comment: Novax's escape fire 
hood is significantly more expensive than similar 
products on the market without nanotechnology.  Its 
appeal may also be limited because although the 
nanotechnology eliminates carbon monoxide, it does not 
remove other toxins from smoke.  End comment.)  Yang 
hopes the firm can become profitable in the third quarter 
of this year.  Novax licensed the nano gold catalyst 
technology from NTRC.  The firm currently has only seven 
employees with no research and development capacity of 
its own. 
 
Comment - "Nano" Results 
------------------------ 
 
¶10. (SBU) The development of nanotechnology is a high 
priority item on Taiwan's science and technology policy 
agenda.  However, official resources dedicated to its 
development are small compared to the research and 
development expenses of Taiwan's large high-tech firms. 
Some of these companies are already pushing the 
boundaries of nanotechnology with negligible assistance 
from the Taiwan authorities; and they're earning big 
profits in the process.  Our discussions with other firms 
suggest efforts to use nanotechnology to keep Taiwan 
competitive in mature industries or develop new 
manufacturing niches have had little success to date. 
Taiwan is still in the early stages of encouraging 
nanotechnology, and its investment could still pay 
dividends in the future.  But considering the focus 
 
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placed on commercializing the technology, the results so 
far are not impressive. 
YOUNG