The flat panel display (FPD) and semiconductor industry is a major part of the high-tech sector in Taiwan and has an output value exceeding NT$1 trillion. As a producer of materials used in the production of FPDs and semiconductors, AZ has continued to consolidate its operations in Taiwan, investing billions in the country to date, and is one of the most important suppliers for many high-tech firms in Taiwan.
The AZ Electronic Materials has focused on the development of chemicals used in the production of electronics, and its main products consist of AZ Photo resist, AZ Developer, and AD Promoter. These products are widely used in the manufacturing of computers, FPDs, communications devices, and a wide range of industrial and automation applications. Responding to globalization trends, AZ has established production and R&D departments in Japan, Korea, Taiwan, Germany, France, and the US, and is listed on the London Stock Exchange.
AZ's long relationship with Taiwan began in 1967 when Germany's Hoechst founded Teh Hua Chemical and Pharmaceutical in Taiwan. Hoechst Taiwan merged with Clariant Taiwan in 1998, and the Carlyle Group acquired the Electronic Materials Unit from Clariant in 2004; the unit was later established as AZ Electronic Materials Taiwan (the Carlyle Group has gradually sold its share of the company).
Thanks to the hard-won efforts of companies and support from government policies, Taiwan's panel industry has flourished, and the thriving AZ has borne witness to the great opportunities that have arisen from this industrial trend. After opening a new-generation photo resist coating plant in Hukou, Hsinchu County in 2004, AZ built a second plant - also in Hukou - in 2007. After these plants began production, Taiwan no longer has had to rely on semi-finished products imported from Japan, which has improved the efficiency of the industry's overall supply chain.
It should also be mentioned that the two Hukou plants are AZ's main production facilities in Asia. Apart from being supplied to customers in Taiwan, the photo resist produced at these plants is also exported to Japan and China in the form of a semi-finished product. This shows that Taiwan is the group's most important manufacturing and distribution center.
Confident in the continuing promise of Taiwan's electronics industry, AZ plans to expand its investment in Taiwan and expects to produce TARC (top anti-reflective coating) at the Hukou semiconductor materials plant. AZ will invest a large sum of US$5 million in the first phase of this project and looks forward to firing up its TARC production line this year. When the time comes, AZ will be able to provide localization services for its two major products-FPD and semiconductor materials.
After having deeply targeted the Taiwan market, AZ is enjoying outstanding sales, and its customers include leading FPD manufacturers such as Chi Mei, AUO, and Winteck, and large semiconductor manufacturers such as TSMC and UMC. AZ's photo resist products used for FPDs have a particularly large market share and are far ahead of their competitors. The fact that Taiwan is one of AZ's best performing markets shows its close ties with Taiwan's electronics manufacturers. However, Rico Wiedenbruch, Managing Director of AZ's Optronics Division, is not complacent with this state of affairs and believes that Taiwan still has room for growth. The decision to build the semiconductor materials plant in Hukou is based on this rationale.
According to Wiedenbruch, AZ's excellent performance in Taiwan can be attributed to the fact that, in comparison with other countries, Taiwan is relatively small so it is easy to foster interpersonal relationships. For instance, many of the managers and employees at AZ graduated from such universities as National Taiwan University and National Tsinghua University, and many graduates from these schools also ended up at leading manufacturers, including TSMC, UMC, Chi Mei, and AUO. As a vendor, these time honored ties have helped AZ to create an excellent niche in Taiwan.
Of course, the main reason why AZ has captured such a dominant market share in Taiwan must be attributed the company's excellent products and solid service. As far as products are concerned, AZ has remained at the forefront of product and technology development since it first developed photo resist technology in 1950 and became the first supplier of photo resist specifically intended for flat panel displays in 1980.
As far as service is concerned, says Wiedenbruch, not only does the electronics industry involve many highly complex and challenging processes, any problem that shuts down production may cause losses of as high as a million US dollars per day. As a result, it is vital to immediately troubleshoot problems and find solutions in the electronics industry. Since AZ has a factory and R&D center in Hsinchu, its engineers can immediately visit customers in this high-tech cluster who have encountered problems and quickly find solutions. AZ's short-term service strategy is to satisfy customers' needs by providing real-time, on-the-spot service.
The electronics industry has long been rapidly evolving and developing new technologies. Customers are constantly seeking new materials that will lower the cost of existing or new processes. For instance, cell phones are ceaselessly evolving, and even Apple has had to continue to develop its iPhone series to the iPhone3 and iPhone4 in order to meet the consumers' expectations of even better products. In addition, customers also expect material vendors to develop new materials with highly competitive prices. In order to contend with international competitors, AZ's long-term strategy is to continue to engage in R&D addressing customers' needs and to grow together with customers.
In the face of these trends, Wiedenbruch noted that Taiwan AZ's R&D department has been growing steadily over the last few years and currently contains approximately ten to fifteen people-triple its size four or five years ago. AZ plans to expand its R&D department even more in the future. Although its R&D manpower in Taiwan is still limited, support from AZ's global network ensures a technological advantage. And apart from AZ's R&D network, its products are also supported by its global network. As Managing Director Wiedenbruch points out, the fact that AZ's factories around the world are all standardized enables the company to readily route shipments to customers from alternative locations if an earthquake or other unexpected natural disasters occur; this is one of the ways that AZ maintains its accountability for its customers.
Rico Wiedenbruch, who is concurrently Managing Director of AZ's Optronics Division and President of Greater China Region, is keenly aware that Taiwan is an important market and is also a key photo resist production site. Now that he is also President of AZ's operations in Taiwan, Wiedenbruch is striving to ensure that the company runs smoothly and is even more successful.
Rico Wiedenbruch is highly knowledgeable of Asian markets and has extensively analyzed the investment environments in Taiwan, China, Japan, and Korea. In Wiedenbruch's view, when Taiwan is compared with China, although Chinese personnel are diligent and can work fast, they need to try harder to ensure that product quality meets requirements. In contrast, Taiwan possesses a relatively mature business environment and has many experienced and well-qualified employees who can work very well independently. Although Japan offers excellent product quality, production costs are too high, and the government is less responsive than in Taiwan. While Korea has similar advantages as Taiwan, the Taiwanese are a bit friendlier and the government is more supportive of foreign firms. Broad perspectives, a hard-working labor force, a favorable operating environment, and government flexibility are Taiwan's greatest strengths.
Concurrently serving as President of AZ's operations in both Taiwan and China, Rico Wiedenbruch holds the opinion that, in view of China's huge potential market and fast-growing optoelectronics and semiconductor industries, as well as the fact that Taiwan and China share the same language and culture, if both regions can strengthen their cooperation, Taiwan will enjoy tremendous business opportunities.
As a native of Switzerland, Wiedenbruch is very familiar with the disadvantages of small countries compared with their larger counterparts. He nevertheless believes that as long as a small country has an open economy, highly-skilled people, and superior products, it can find and maintain its own niche. He therefore recommends that Taiwan should strive to preserve its economic openness, especially in regards to the flow of capital, and he is confident that doing this will ensure Taiwan's continued growth momentum.
Source： Department of Investment Promotion, MOEA
MOEA
MOEA DOIP
MOEA YouTube
Let's Juiker Together
