History of Industrial Development in Taiwan (Part II)
Throughout Taiwan’s economic development, many of Taiwan’s industries swept international markets, established numerous “Taiwan No. 1” records and earned huge amounts of foreign exchange. Part II continues with the introductions of these industries and provides a history timeline of their development.


8. Petrochemical Industry
For decades, the prosperity of the downstream products of petrochemical industry has accelerated the demand of midstream products. Moreover, with reverse integration, the government contributed to the establishment of the petrochemical upstream plants, and formed a compact industry chain regarded as the steady base for Taiwanese economic development.
The petrochemical downstream processed products cover almost every domain of our daily necessities. The processed products are sold all over the world. In 1980s, one out of every five people wore rubber shoes made in Taiwan. Taiwan was once regarded as the Nation of Umbrellas, the Nation of Toys, the Nation of Christmas Lights, the Nation of Plastic Shoes, the Nation of Electronic Components, and the Nation of Ready-made Clothes. These achievements are all related to petrochemistry. Additionally, some petrochemical product yields in Taiwan have been extraordinary in the world, such as having CHIMEI as the first in ABS production, PTA as the second in polyester fiber raw material production, holding a 70% market share in computer discs production in the world, and 60% market share in computer mouse manufacturing.
The petrochemical industry of Taiwan had undergone the development of post-war prosperity and formed an enormous system. The petrochemical downstream processing industry was formed by thousands of factories and stores of different scales. Its related product yields occupied 30% of the entire manufacturing market. In addition, petrochemical materials such as plastics, synthetic fibers, and synthetic rubbers have given Taiwan enormous foreign exchange earnings.
A great number of petrochemical products are necessary items found in daily life, including our food, clothes, houses, vehicles, recreations, entertainments, medical treatments, and so forth.
9. Semiconductor Industry


For forty years, the information technology industry of Taiwan has been progressing greatly, not only taking the lead all over the world but also admired as a "Technology Island" that draws worldwide attention. Besides the insights of the predecessors such as Li Kuo-ting, Sun Yun-hsuan, Pan Wen-yuan, and Hsu Hsien-hsiu and so on, the institutional arrangement also plays an important role. The establishments of Industrial Technology Research Institute, Hsinchu Science Park, and National Chip Implementation Center influentially contribute to the improvement of technologies and capabilities of the semiconductor industry.
The early electronic industry in Taiwan is based on the export processing with cheap labour. The export policy of Taiwan in the 60s attracted the American clients to move the low-tech processing in the production of semiconductor such as packaging to Taiwan and thus started the semiconductor industry in Taiwan. Hua-tai, Wang-pang, Chi-chen, and Huan-yu are the pioneers of the local semiconductor industry. Although many difficulties happened when the industry just started, it developed many future talents for the Information and Electronic industry in Taiwan. On education, in 1964, National Chao-tung University established the semiconductor laboratory, which plays a key role in educating the local talents of semiconductor. 
In the early 1970s, Taiwan eagerly developed the IC industry. In 1974, Electronic Research Centre (the present Electronic & Optoelectronics Research Laboratory) was established to promote the IC industry through introducing the IC design and production technology from the United States. In the same time, Technical Advisory Committee (TAC) was established. Through TAC, in 1976 the Electronic Research Centre transferred the production technology from RCA. The process of the transfer from RCA is a “deep-rooted” policy and is still a unique model of the technology transfer in Taiwan. It not only introduced the key technology into Taiwan, but also became the flowerbed for the future Information Electronic Industry.
In 1980, the Science Park was established. Following the establishment of Hsinchu Science Park and the spin-off companies of ITRI, many overseas scholars and the private investment are gradually into the IC industry. The semiconductor industry in Taiwan gradually shifted from the downstream packaging (based on the foreign investment) to the upstream design, photomask industry, and midstream production led by the local business.
With more than ten years of cultivating added with the emergence of the capital market, more and more private invested companies started to expand after the 90’s. At the same time, many new companies were also established. Till then, Taiwan’s semiconductor industry was no longer driven by the central government. The development of the industry showed its transformation from a labor intensive industry to a capital intensive one and now to technology-oriented. From 1960’s foreign invested complete-packaging industry, we now see local business with a complete range of up-stream (design, photomasking), mid-stream (manufacture) and down-stream (packaging, testing) suppliers.
10. Steel Industry


A skyscraper needs supports of steel to stand tall. A car needs a chassis of steel to run free. A long-span bridge needs steel to connect the banks of a river. Internet reaches every corner of the world. A computer needs a case of steel to make information exchange possible. From the tiniest screws to the gears that drive production; from the refrigerator, oven and washing machine in your house to the umbrella that keeps you from burning sun and torrential rain; products made of steel have many faces that are hard to image. Steel and modern life are so closely related. Steel industry is a business that produces 1,261.9 billion NTD (as of 2006), ranking the third in Taiwan. It often referred to as “the mother of all industries.”
The steel industry in Taiwan started from refinery of scrap metals and ship recycling, and advanced to integrated steel mill and electric arc refinery. Up to this point, the solid foundation of Taiwan’s steel industry is completed. There is a complete system of up, middle and down streams that provide independent production of numerous types of steel, save several very special types of steel. A complete system of steel industry is established.
(1) Evolution of Taiwan’s steel industry Infancy - before 1970s:
Tang Eng Iron Works became the pioneer of Taiwan’s ship recycling in 1948 when it started salvaging the Miliwan, a Japanese war ship sunk offshore of Kaohsiung in WWII. Later, due to the booming of ship recycling, steel industry was supplied with enormous amount of scrap metals and steel ripped off from recycled ships. The government stepped in for help and guidance, and this is when Taiwan became known as the “Kingdom of Ship Recycling.” 
(2) Growing pain - Mid 1970s:
China Steel established its integrated steel mill and started the production of hot and cold-rolled steel products. The production of crude steel reached 3.25 million tons. 
(3) Maturity - 1980s:
The steel industry started to its transformation into an industry that is skill-intensive, capital-intensive and technology-oriented in response to economic development. The phase 1 and 2 expansion of China Steel, stainless steel mill of Tang Eng and other private hot and cold rolling mills started production. The up and down streams of the steel industry system was taking shape and the industry was moving into maturity. 
(4) Expansion - 1990s:
Under the pressure of over-expanding production, environmental demands and relocation of downstream industries to other countries, the steel industry, suffering unbalanced supplies and demands, was looking for exports and the vast market in China. This was the period of expansion in production scale and extent of sales. 
(5) Integration - 2000s:
For the development of high value industry and in response to the competition of low-priced Chinese steel, Taiwan’s steel industry started to establish strategic R&D alliance to promote solutions such as industrial technical upgrades and strategic investments, and to set the path toward higher added value and innovation-oriented development. This is the period that a full-scale integration was at its highest peak.
The Outfit for Iron Smelting Operators

History timeline and milestones





During Qing Dynasty, trade between agriculturally rich Taiwan and Mainland China was frequent. Natural harbors such as Fu Cheng, Lu Gang and Meng Jia became Taiwan’s major commercial centers.

After the Tianjin Treaty in 1858, Taiwan’s harbors such as An Ping, Danshui, Keelung and Dagou were opened for commerce. Taiwan became a new centre for commodities trading.


In 1871, Ryukyu Islanders were massacred by Rotan tribe aborigines, and this incident led to Japan’s 1874 invasion of Taiwan. British and American involvement made the Qing government realize Taiwan’s importance and governors were sent to develop and protect the island.

During Mingchuan Liu’s governorship, the Keelung~Hsinchu railway was completed and street lighting was installed in Taipei.


The German-made “Tung Yun Hao” was brought in by Mingchuan Liu in 1887. It was powered by steam and could reach a phenomenal top speed of 35 km/h.


Unified system of measurements.


Kaohsiung was also known as the “sugar port”. The first modern sugar plant was established in Kaohsiung in 1902 and the sugar industry was one of the first to attract migrant workers.


Taiwan’s 1st hydropower plant at Kui Shan was completed.


The Japanese set up vocational schools in Taiwan and laid the foundation for a “training and practical” based education system.

After the “Taiwan education order” in 1919, the basic rail, telecommunication, medical schools were expanded to include areas such as agriculture and business. Higher education was also made available, including today’s National Cheng Kung University and National Taipei University of Technology.


Before 1930, food processing was the main industry in Taiwan and it promoted the development of related industries such as electricity, cement and fertilizer.

After 1930, there were numerous machinery factories including Tatung Co. and Tang Eng Iron Works. By 1941, Taiwan had 15 factories producing bicycle parts that were previously imported from Japan.


“Asia’s 1st, World’s 7th” hydropower plant at Sun-Moon Lake was completed.


After the outbreak of World War II in 1942, daily necessities became increasingly scarce. Japan mobilized all of Taiwan’s resources and consolidated the flow of capital, manpower and raw materials in order to speed up production and industrialization.


Before 1945, Taiwan was ruthlessly bombed by the Allies. After 1945, Taiwan was still unstable when the Kuomintang government moved to Taiwan. Reconstruction efforts in utilities, fertilizer industry…etc. began rapidly.

In 1949, Mainland textile manufacturers retreated to Taiwan with capital and equipment, transforming the local industry into a capital-intensive industry. the “Tompkins knitting machine” that Chung Shing Textile brought from the Mainland in 1949.

The “375 rent reduction” in 1949, “state land release” in 1951 and “farmers, owners” policy in 1953 revived agriculture in Taiwan. Sugar and rice production rapidly recovered and sugar became a major export item again.


During 1950s, the surplus from rice and sugar alone brought in US$100 million a year. Under policies such as “compulsory procurement” and “rice-fertilizer exchange”, the government was able to fund economic development with agricultural surplus. Without this agricultural sacrifice, Taiwan would not have the industries we see today.

With the outbreak of Korean War in 1950, US sent her 7th fleet to assist in Taiwan’s defense and provided economic aid. For 15 years, US provided US$100 million worth of aid every year in areas such as electricity, fertilizer, education…etc. As a result, US left a lasting impact on Taiwan’s politics and economy.


In order to decrease the reliance on imports and reduce trade deficits, the government encouraged farmers to grow high-value crops such as pineapple, asparagus and mushroom that could be canned and exported. In 1952, agriculture and processed foods accounted for 91.9% of exports by value and provided support for industrial development.


The 1st 4-Year Plan from 1953 to 1956 aimed to increase local production and balance international accounts. Under the prerequisite of “growing industry through agriculture and developing agriculture through industry”, labor-intensive light industries were developed.


US aid allowed HeySong Co. to acquire the latest bottling machines from Japan and begin mass production. US aid also allowed Formosa Plastics to open Southeast Asia’s 1st plastics factory in 1957 and Kaohsiung’s Export Processing Zone to be developed.

The focus of the 2nd 4-Year Plan from 1957 to 1960 was shifted from achieving economic stability to economic development. Goals included resource development and export expansion.


During the 1960s, the government proposed a policy of “export expansion”, promulgated the “Investment Encouragement Act” and established Export Processing Zones in order to attract foreign investments.


Tatung Co. began producing transistor radios in 1961, black and white televisions in 1963, and color televisions in 1969. With low labor costs, sufficient assembly technology and favorable government policies, Taiwan’s electrical industry quickly prospered.


The termination of US aid in 1965 forced local textile producers to begin investing in synthetic fibers and ready-made clothes. Between 1950 and 1985, Taiwan’s textile industry grew at an annual rate of 28%.


In 1966, Taiwan’s first Export Processing Zone was established in Kaohsiung. Customers took advantage of the duty-free provisions by sending their own machinery, technology and raw materials to Taiwan for the final stages of assembly.


The Chinese Petroleum Corp.’s first naphtha cracking plant was established in Kaohsiung in 1968. Imported crude oil was turned into raw materials for the textile, plastics, bag, rain equipment and toy industries.


Taiwan’s basic industrial infrastructure was solidified with the establishment of the Industrial Development Bureau in 1970, “10 Major Constructions Project” in 1973, “Industrial Technology Research Institute” in 1973 and Hsinchu Science Park in 1978.


The Executive Yuan passed the “Science and Technology Development Act” in May 1979. The Act encompassed the energy, materials, information and automation technology sectors. Biotechnology, photonics, food science and hepatitis prevention were added in 1982.


To view Part I.

Text and images are provided by National Science and Technology Museum