I saw an interesting post on Venture Beat about Acer Launching an Electric All-Terrain Vehicle. This struck a chord because Taiwan-based Acer is a manufacturer of PCs and other consumer electronics (CE) devices. Acer is one of the most prominent companies in Taiwan’s CE complex, which builds almost all of our consumer gadgets. They are closely tied to some of the industry’s most important ODMs, component vendors and contract manufacturers. It is not that surprising to see a consumer electronics giant diversify into higher priced devices as they move up the value chain. However, if you don’t look at Acer as an device maker, but instead view them as a flagship of the Taiwanese electronics industry, the announcement has broader implications.
I have been watching the automotive industry for a while. It is now the third largest consumer of semiconductors. In an earlier post about the semis industry I suggested that the industry needs to look to automobiles as a major potential growth driver in future years. I know at least one other major Asian electronics giant that has begun to invest massively in electronics for automotives. Their reasoning is very compelling. Today’s auto supply chain looks a lot like the mobile phone supply chain fifteen years ago. Back then, the suppliers to the handset OEMs were largely subsidiaries or spin-offs from the the companies that built base stations and phones themselves – Nokia, Motorola and Ericsson. Then companies like Samsung and LG, using merchant silicon from Qualcomm, entered the industry and eventually pushed the handset OEMs to move away from captive suppliers. A lot has changed since then, but handset vendors do not build their own components anymore. Of course, there are notable exceptions, but even Apple and Samsung today only design two or three of the hundreds of chips that go in their phones. Everything else is built by outside suppliers. And those outside suppliers are based in and around Taiwan’s electronics complex. You see where this post is going?