Taiwan: conquering the world--and China. They call it "Chaiwan"

Economist story.

Starts by saying the most important tech show in the world is arguably Computex in Taipei.

The numbers:

Taiwan is now the home of many of the world’s largest makers of computers and associated hardware. Its firms produce more than 50% of all chips, nearly 70% of computer displays and more than 90% of all portable computers. The most successful are no longer huge but little-known contract manufacturers, such as Quanta or Hon Hai, in the news this week because of workers’ suicides (see article). Acer, for example, surpassed Dell last year to become the world’s second-biggest maker of personal computers. HTC, which started out making smart-phones for big Western brands, is now launching prominent products of its own.

The weakness of this model:  Taiwan improves parts over time and manufactures them with great skill and speed, but it does not innovate on the leading edge, and increasingly, all that manufacturing moves to China.   In the info age, this is almost the equivalent of the "commodity trap":  your margin is always so razor thin that you cannot invest sufficiently in branding and R&D, argues one expert.

With China aspiring mightily to move up the chain, Taiwan's fate is ever-more intertwinned:  China recruits Taiwanese firms to help it set higher tech standards, and Taipei loosens restrictions on FDI and tech transfer into China.

Killer ending:

It is hard to see China dethroning Taiwan as manager of the world’s electronics factories soon, says Peter Sher of the National Chi Nan University. But the IT industry in the two countries will increasingly become intertwined, predicts Mr Ernst. “Especially in IT, Taiwan is becoming more and more part of the Chinese economy,” he says. Indeed, some tech types already fuse the pair into “Chaiwan”.

Say good-bye to this great power-war scenario.  The game has moved on.