Chapter 9 IT Technology Transfer: Corporate and Country Empirical Experience ‐ UMI, Taipower, Samsung; Taiwan, Korea, Singapore

Abstract

The glitter of techtransfer agreements often tends to be a camouflage and the number of trainees is no substitute for genuine techtransfer: the self‐sustained duplication of foreign technology. We study techtransfer in Taiwan, South Korea, and Singapore to develop the ethos of successful IT techtransfer. (1) Taiwan: In 1976 a US technology company, RCA, transferred CMOS technology which is foundational to semiconductors, not to a private company in Taiwan, but a public government agency. RCA could not trust Taiwan to honor Intellectual Property Rights (IPR) because of its piracy image. At home, RCA was accustomed to America's respect of its public institutions to do the honorable thing. So, RCA opted for a private‐to‐public techtransfer. Even after 16 years, another private company would not trust Taiwan private sector; General Physics of Columbia, Maryland, would transfer nuclear reactor simulation technology not to a private company, but to a government support organization, Institute for Information Industry. (2) South Korea: In the mid‐60s, US firms (Motorola, Signetics, Fairchild) began to assemble chips, followed by Japanese firms and 27 Japanese‐Korean Joint ventures (Samsung‐Sanyo; Crown Radio; Toshiba and Goldstar‐Alps Electronics). In 1975, Samsung acquired the only locally‐owned chip company (Korea Semiconductor) which manu‐factured CMOS chips for watches. (We recall that Taiwan imported CMOS technology from RCA in 1976). During 1983–84 Samsung ac‐quired DRAM technology and the ethnic Korean and Chinese employees succeeded in producing 64 and 256 k‐bit chips. CEO Lee took significant risks, time and again, to let Samsung join the race to design and manufacture successive generations of semiconductor technology. Much of the cumulative US$800 million investment in semiconductors was recouped in 1987 with the market upturn, and higher prices for 256 k‐bit chips. From 1989 onwards, Samsung pushed ahead to achieve design leadership by aggressively involving engineers in all phases of technology transfer and application, as well as by forging new joint ventures with foreign industry leaders which gave Samsung a more dominant role. 3. Singapore: Contrary to the leapfrogging advanced in the litera‐ture since 1982, suggesting that NICs leap over technology generations, Singapore electronics industry supports a model of incremental learning under which TNCs [Trans‐National Corporations] transferred technology gradually. Much of the advance was in pre‐electronic activities such as mechanical, electro‐mechanical and precision engineering, rather than in software or R&D, as would be expected under leapfrogging. As the subsidiaries advanced technologically, they formed forward links with customers, and backward links with local suppliers of capital goods. The government built up the appropriate infrastructure. We develop three Desiderata (desired conditions) for techtransfer: (1) A Pre‐determined Sequence of Technology by Type and Level, (2) A Pre‐determined Sequence of Intellectual Property Rights Protection, and (3) A Pre‐determined Sequence of Upgrading of Transferee's Technical Skills. Why should the transferor engage in any techtransfer? Because leading US corporations use only about 5 percent of their process inventions (Rank 100, 99,…,96) to improve/invent products. To protect the market of these five products, process inventions with Ranks 95, 94,…, 1 have to be denied to competition; they have to be literally locked up. If any NIC is at technology level say, 15, techtransfer of technology level 45 would instantaneously increase the transferee's technology level by (45–15÷15 =) 200% with no risks of R&D, no investment in facilities, no investment in personnel. That transfer would not threaten the transferor's latest products embodying Ranks 100, 99,…, 96. However, it would threaten the transferor's products embodying Rank 45. New technology leadtime is 6–18 months. If the transferee stays out of the main markets of the transferor (e.g. USA, Europe) for that leadtime, the transferee can sell in say, Asia and the Middle East, Africa and Australia. The transferee could offer the transferor two types of revenue: (1) licensing fee which is usually about 1–3% of gross revenue generated from products which could not have been produced without the transferred technology; and (2) 1% of revenue from new markets created by the technology. If the transferee observes the letter and the spirit of techtransfer for six months, a higher level technology, say level 60 could be transferred, instantly raising the transferee's technology level by (60–15÷15 =) 300%. This pre‐determined sequence of techtransfer is a win‐win situation. The transferor receives revenue from what is currently frozen assets; the transferee systematically raises its level of technology by 200%, 300%, etc. without having to risk a single dollar on uncertain R&D.

Citation

(1997), "Chapter 9 IT Technology Transfer: Corporate and Country Empirical Experience ‐ UMI, Taipower, Samsung; Taiwan, Korea, Singapore", Asia Pacific Journal of Marketing and Logistics, Vol. 9 No. 1/2, pp. 145-159. https://doi.org/10.1108/eb010286