Advancing Towards "Intelligence": Asia's Manufacturing Sector on the Road

In the face of supply chain disruptions, the pandemic, and geopolitical tensions arising from the US-China trade war, the manufacturing industry has shifted from global integration to regional concentration. Asian countries need to examine their advantages and challenges as they navigate the path of intelligent manufacturing. How is the current progress unfolding?

# Asia's Manufacturing Sector Undergoing Transformation # Zero Carbon as the New Driving Force for Transformation # Investing in the Future is Imperative

Salon Participants

葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

曾伯楷

集邦科技資深產業分析師

黃明和

台中精機董事長

What happened?

Over the past few years, the world has experienced the arduousness caused by supply chain disruptions. The intensifying political tension between the United States and China has led to formulating bilateral or multilateral cooperative agreements to establish supply chain alliances for mutual balance. Moreover, the market's demand for a wide variety of products in smaller quantities, along with the zero-carbon trends, has promoted to move towards shorter supply chains and restructured partnerships.（IEK）

The maturation of the Internet of Things (IoT) and AI technologies has been gradually gaining attention, particularly with the growing applications of generative AI. Industry leaders showcased their implementation of these cutting-edge technologies in factory settings at the Hanover Industrial Trade Fair in Germany.（EDN Taiwan）
In the face of evolving global dynamics, the supply chain network of Asian countries such as South Korea, Japan, Taiwan, Singapore, Vietnam, and Thailand may gradually replace China to become the focal point of global manufacturing activities.（The Economist）
The World Economic Forum (WEF) has unveiled its latest selection of "Global Lighthouse Factories," which serve as beacons of Industrial 4.0, smart manufacturing, and digital transformation. Among the 29 newly added benchmark factories, Taiwan, Thailand, the Philippines, Singapore, and Japan each have a factory that has made the prestigious list.（WEF: Global Lighthouse Network）

How's the latest development of intelligent manufacturing progress in key Asian supply chain countries?

Intelligent manufacturing is built upon digitization, and key Asian countries in the supply chain are leveraging their diverse industrial backgrounds as they journey forward. Along the way, each country faces its own set of opportunities and challenges.

According to senior analyst P.K. Tseng from TrendForce Corp., Japan, and South Korea have progressed in digitalization and communication. Japan, with its rich history in manufacturing, has a firm grasp on the key technologies and components. Both countries are swiftly moving towards intelligent manufacturing, where they have respective strengths, such as semiconductors and heavy industries.
Cathy Yeh, the Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp., points out that Singapore effectively utilizes its maritime nation mindset to understand the demand side of the intelligent manufacturing market. With visionary government policies, and a thriving logistics and transportation industry, Singapore effectively plays the role of creating demands in the supply chain and being the hub of transshipment across the Asia Pacific region.
Huang Ming-he, Chairman of Victor Taichung Machinery Works Co., Ltd., shares that Southeast Asian countries like Vietnam and Thailand have an advantage in their abundant labor force. However, they need to leverage foreign assistance to have the opportunity to move towards automation and intelligent manufacturing. The demand for automation from small and medium-sized enterprises in the local supply chain has become a market opportunity for Taiwanese manufacturers.
Cathy Yeh further emphasized that Taiwan's manufacturing industry possesses exceptional resilience, keen market insights, and strong technical capabilities. Nevertheless, investing in talent and tools is essential for the process of digital transformation.

What will happen in the future?

The World Economic Forum has released a report on "Global Lighthouse Factories," which has specially highlighted the list of "Sustainable Lighthouse Factory." Given the growing trend towards achieving zero net carbon emissions, the focus for the manufacturing industry in the next decade will be on harnessing digital transformation and Industry 4.0 technologies to achieve green manufacturing.（WEF: Global Lighthouse Network）

With carbon emissions data serving as the decisive factor for manufacturers to secure a position within the supply chain, energy efficiency and carbon reduction have emerged as explicit goals for manufacturers aiming to incorporate intelligent technologies and equipment into their operations. (According to P.K.’s sharing)
The key lies in automating the collection, exchange, and consolidation of carbon emissions data while effectively managing the intricate details involved in the process. (According to Cathy’s sharing)
A promising approach emerges as companies showcase the effectiveness of tackling the most challenging aspects first when calculating internal carbon emissions. Collaborative efforts involving industry, government, academia, and research institutions, with leading companies at the forefront of driving transformative initiatives among partner firms, are expected to yield preliminary results within a three-year timeframe.（According to Ming-he’s sharing）

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Salon Talk

What are the notable changes in Asia's manufacturing industry as a result of the dramatic changes in the international political and economic landscape in recent years? 共 2 則對談comments 2023-07-25 16:27:53

葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

The trend of the manufacturing industry shifting towards regional concentration has become a pragmatic reality. Firstly, regionalization of manufacturing has become a "rigid demand" rather than solely a response to geopolitical risks, as it has been recognized that previous efforts in regional deployment can indeed lower costs.

Secondly, in the midst of political and economic disruptions, the world is no longer flat, as emphasized by Morris Chang, the founder of TSMC, who pointed out the end of the globalization trend and the necessity for countries to sign mutually beneficial trade agreements, including the ongoing Taiwan-US trade initiative.

2023-07-25 16:26:38

我對於這則留言有疑慮

While automation and IoT have become commonplace, intelligent manufacturing is more commonly observed in newly constructed factories. In Taiwan, there are several standard features for newly built factories, namely, prioritizing intelligence and pursuing sustainable practices, which include green building and renewable energy utilization.

The AI focus from the latter half of 2022 to the present year is transitioning from automation to autonomous. This encompasses not only applying AI for automation and inspection purposes in factory production lines but also further transforming the wisdom of skilled workers into artificial intelligence, enabling human-machine collaboration and utilizing AI as a valuable assistant for white-collar professionals.

2023-07-25 16:27:53

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What are the key advantages held by Japanese and South Korean companies as they venture into the realm of intelligent manufacturing? 共 4 則對談comments 2023-07-25 16:31:43

曾伯楷

集邦科技資深產業分析師

Intelligent manufacturing is the progressive evolution of digitization. Japan and South Korea have gained a head start in digitalization, with advanced levels of implementation and advancements in communication technologies such as 5G and 6G, providing them with a distinct advantage in terms of high bandwidth and extensive connectivity.

Japan, being rooted in the manufacturing industry, recognizes the importance of elevating technological barriers in global manufacturing. The government has proactively invested in promoting intelligent manufacturing and industrial digitization policies. They have demonstrated a firm grasp on critical components and equipment from a technical standpoint.

2023-07-25 16:29:23

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When looking into specific industries, the emphasis on empowering and enhancing existing sectors through intelligent manufacturing has led to early engagement by Japan and South Korea, leveraging their strengths in industries such as South Korea in semiconductor industry and Japan in heavy industry.

2023-07-25 16:29:33

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葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

In recent years, there has been a noticeable change from inward to outward focus among Japanese and South Korean companies, as they demonstrate greater willingness to explore opportunities beyond their home countries. Through pilot projects and investment via mergers and acquisitions, these companies have sought to acquire advanced technologies and foreign talent, thereby accelerating innovation in intelligent manufacturing.

For instance, Hyundai Motor, South Korea's largest automotive brand and currently the world's third-largest automaker, exhibits ambitious goals in the development of new energy vehicles and technology investments. They recently acquired Boston Dynamics, a renowned US robotics company known for its robotic dog, Spot, and they have established a research institute in the United States to explore the applications of AI and robotics technologies.

2023-07-25 16:31:11

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Japan, facing a declining and aging population, is experiencing a severe talent and labor shortage, prompting a pressing need for human-machine collaboration solutions. While Japan's manufacturing industry boasts its own technical expertise, its strength lies in the robustness of its brands, rooted in a culture of craftsmanship that values absolute precision. Although there is an active effort to attract foreign technology and global talent to foster innovation, Japan’s internal cultural dynamics often lead to longer integration periods.

2023-07-25 16:31:42

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What role does Singapore play in intelligent manufacturing in the Asia-Pacific region? 共 3 則對談comments 2023-07-25 16:36:04

葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

In the realm of intelligent manufacturing, Singapore assumes a pivotal role as a demand-driven player. Traditionally, manufacturing is perceived as a capital-intensive industry that requires abundant resources and a large workforce, aligning with the thinking prevalent in mainland countries. However, the fundamental question arises: why engage in manufacturing? Why produce products? The answer lies in demand. And where does demand come from? It originates from the market. Adopting an oceanic mindset, Singapore recognizes that by comprehending market dynamics, one can seize manufacturing opportunities and, in turn, secure profits on a global scale.

2023-07-25 16:34:39

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To establish itself as an influential voice in shaping and defining markets, even as a compact territory, Singapore understands the need to attract talent and capital. Two decades ago, the Singaporean government established A*STAR (Agency for Science, Technology and Research) to attract global talent and set its sights on future development over the next three to four decades. Researching cutting-edge technologies that have yet to find demand, such as biotechnology and zero-carbon technology, Singapore has become an international hub for corporations and a key center for research and manufacturing zones.

2023-07-25 16:35:46

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Also, Singapore has long invested in the development of its logistics and transportation industry. During the closure of the Shanghai port due to the pandemic, Singapore's port throughput briefly ranked first in the world. Through years of preparation, when the opportune moment arrived, Singapore was well-prepared to take on the role, positioning itself as a vital hub for supply chain demands and trans-shipment in the Asia-Pacific region.

2023-07-25 16:36:04

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What challenges and opportunities do Southeast Asian countries face when heading towards intelligent manufacturing? 共 4 則對談comments 2023-07-25 16:38:35

曾伯楷

集邦科技資深產業分析師

Thailand stands as the largest automotive exporter in Southeast Asia, with a substantial demand for automotive manufacturing. To meet this demand and enhance production efficiency, Thailand finds its most significant impetus in embracing smart manufacturing. Vietnam, on the other hand, has not shown the same level of motivation as Thailand. However, both countries share similarities, such as possessing significant domestic market demand, benefiting from demographic dividends, experiencing a rise in their local economies, and enjoying geopolitical stability, relatively speaking.

2023-07-25 16:36:51

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The disadvantages faced by Vietnam and Thailand include lack of digitalization and a shortage of skilled professionals, which are advantages for Japan and South Korea. Nevertheless, the market demand in Japan and South Korea is not as robust as in Southeast Asia. Challenges faced by Vietnam and Thailand include the continued use of outdated equipment in factories and high costs associated with transitioning to new technologies. Additionally, after the implementation of advanced equipment, the ability to promptly access professional support teams for on-site application and subsequent maintenance remains an unresolved issue.

2023-07-25 16:36:59

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葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

Thailand has established itself as a prominent manufacturing base for Japanese car OEMs over the years. However, in recent years, there has been a significant shift with more Chinese car companies investing in electric vehicles (EVs) in the country. As for Vietnam, a notable development is the emergence of VinFast, an automotive brand that has focused on the EV market. VinFast has not only created a local market but has also made inroads into the United States, making it an interesting and worth-observing brand. Nonetheless, the domain of advanced car manufacturing technologies still predominantly resides in the hands of foreign corporations, leaving the mastery of key intelligent manufacturing techniques as the foremost challenge for both nations.

2023-07-25 16:38:08

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黃明和

台中精機董事長

Vietnam, Thailand, Malaysia, Indonesia, and other Southeast Asian nations enjoy the advantage of abundant workforce. However, to move towards automation and intelligent manufacturing, they must rely on external assistance. Within the local supply chains, small and medium-sized enterprises currently require intermediate or lower-level industrial machinery, as well as interconnection between individual machines. Taiwanese companies excel in this area, with their expertise and competitive pricing. Supported by Taiwanese government's Digital New Southbound Policy, they can provide services in automation or semi-automation, helping these enterprises advance to the stages of Industry 3.0 or 3.5. This presents a notable opportunity for Taiwanese companies.

2023-07-25 16:38:44

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In the journey from IoT to AIoT, how should Taiwan's manufacturing sector position itself? What are the challenges it confronts, and how can they be effectively tackled? 共 6 則對談comments 2023-07-25 16:41:56

葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

In recent years, thanks to the shortage of semiconductor chips and the presence of TSMC, Taiwan's significance as a major electronics product supplier has become widely known.The strength of Taiwan's supply chain lies in its high flexibility, strong adaptability, keen market sensitivity, and robust technological capabilities. This allows for swift adjustments in product lines, diversification of investments, and the expansion of production bases worldwide.

2023-07-25 16:39:41

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However, the mindset of small and medium-sized enterprises (SMEs) in Taiwan tends to align with a colloquial Taiwanese saying, "The ceramic master uses a bowl with a flaw for himself." This reflects a thrifty approach and also manifests in their hesitation to invest in the talent and tools necessary for digital transformation. A change in mindset and accelerated talent succession are key challenges faced by Taiwan's vast manufacturing industry.

2023-07-25 16:40:08

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曾伯楷

集邦科技資深產業分析師

The majority of Taiwan's small and medium-sized business owners have toiled tirelessly to build their enterprises. Their primary concern is ensuring that their money is spent wisely, and they are only willing to take action if the benefits are evident or if the task is a must-do. The crux of the matter lies in the strength of demand. If the market does not experience significant growth, the urgency of digitalization may diminish, and even the deployment of sensors for IoT will be put on hold.

2023-07-25 16:40:33

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The Industrial Development Bureau previously initiated the Smart Machine Box (SMB) project to aid manufacturers in resolving the data acquisition issues associated with legacy machinery. Some factories have opted to introduce "plug-in" devices, such as utilizing unmanned aerial vehicles (UAVs) for facility surveillance or incorporating robotic arms and AGV unmanned transport vehicles. These measures allow for swift implementation and deliver tangible benefits without disturbing the core equipment, representing a minor trend in Taiwan's journey towards smart manufacturing.

2023-07-25 16:40:46

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黃明和

台中精機董事長

Adequate infrastructure and domain-specific knowledge are prerequisites for transitioning towards AIoT. By building upon IoT technologies like smart machine networking and seamless software-hardware integration, and combining them with expert judgment, the groundwork can be established. This sets the stage for achieving digital twins and subsequently exploring the potential applications of AI. Otherwise, the outcome will simply be a case of "garbage in, garbage out."

2023-07-25 16:41:27

我對於這則留言有疑慮

As automation evolves towards intelligent automation, businesses must continually invest in talent, research, and equipment, which can result in a growing disparity between the dominant players in the machine tool industry. Within this landscape, a critical issue faced by the precision machinery sector is the scarcity of mid- to high-level electrical automation professionals. Industry players must strive to improve their production environments while also bolstering investments in research and innovation to compete with the talent magnetism of the 3C(Computer, Communication and Consumer Technology) industry.

2023-07-25 16:41:56

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In recent times, ESG and energy-saving & carbon reduction have become hot topics. How do they impact the shift of the supply chain towards intelligent manufacturing? 共 4 則對談comments 2023-07-25 16:44:16

葉怡君 Cathy Yeh

Principal Group PM Manager at Customer Innovation, Industrial Solutions, Microsoft Corp.

Whether viewed from the perspective of public welfare, international markets like the European Union, domestic regulatory bodies such as the Financial Supervisory Commission, or from energy conservation considerations, there are multiple driving forces at play, among which the most significant force is only when meeting standards can manufacturers enter the international market. However, the process of disclosing carbon emissions data and presenting reports involves intricate details that require careful integration. The key lies in automating data collection and exchange, as well as effectively integrating the data.

2023-07-25 16:42:32

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曾伯楷

集邦科技資深產業分析師

ESG and energy-saving carbon reduction have emerged as undeniable catalysts, making the adoption of intelligent manufacturing a clear objective and further reinforcing the motivation for businesses to undergo transformation. Profitability is now secondary. The most critical factor is the demand from international buyers for carbon footprint and emissions data. Failing to comply with these requirements could hinder entry into the supply chain and potentially impact order placement. As a result, companies are being compelled to embrace intelligent manufacturing.

2023-07-25 16:43:35

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黃明和

台中精機董事長

In response to climate change, sustainable business practices, and the requirements of European and American markets, there is a widespread recognition that carbon neutrality is a must. The year 2023 is considered the kickoff for these efforts. Companies can begin by addressing the most challenging aspects internally. Victor Taichung Machinery Works Co, for instance, has already obtained green factory certification, with its used-to-be 3K( same as 3D, meaning Dirty, Dangerous & Difficult)foundry serving as a demonstrative example for other plant areas.

2023-07-25 16:43:57

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Over a decade ago, a consortium of machine tool manufacturers formed the M Team, guided by the Corporate Synergy Development Center, successfully led their partner companies towards Lean production. Now, they are ready to take the next step in response to the Industrial Development Bureau's call for a "lead the small with the big" approach to low-carbon and smart transformation. Harnessing the power of their team, they aim to facilitate the transition of around forty to fifty peripheral partner companies towards low-carbon practices. Initial results are expected to be obtained within three years, with tangible outcomes anticipated by 2030.

2023-07-25 16:44:16

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延伸閱讀 Read more

Benefiting from the China-US trade war, How did Vietnam Emerge as the World's Factory with A Bullish Outlook?

Vietnam is emerging as the world's new factory. In 2022, when the Asian economy slowed down, it was the only country posing stellar economic growth. Despite its socialist state status, Vietnam's economic policy has been constantly opening up and actively attracting foreign investment in recent years. What makes Vietnam a popular destination for global investment inflows?

2023-07-14 10:00:00

How Can South Korea, with Costly Investments, Survive Amidst the U.S.-China Confrontation?

South Korea, which emerged as one of the Four Asian Tigers, has now grown to be the 10th largest economy in the world after surviving the Asian financial crisis in 1997. How does South Korea continue to lead in global high-tech development amid the US-China rivalry? What is its strategic approach to market positioning?

2023-07-07 10:00:00

Striving to Go Green Economically, Thailand Builds A Resilient Supply Chain with Foreign Investment

Fueled by IPEF, Thailand is vigorously promoting the Bio-Circular-Green (BCG) economic model, trying to get ahead of the game by valuing the resilience of supply chains in post-COVID-19. What are the policy priorities amid Thailand's green economic transformation? Where are the business opportunities Taiwan can pursue?

2023-04-27 14:08:00

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Advancing Towards "Intelligence": Asia's Manufacturing Sector on the Road

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What happened?

How's the latest development of intelligent manufacturing progress in key Asian supply chain countries?

What will happen in the future?

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Benefiting from the China-US trade war, How did Vietnam Emerge as the World's Factory with A Bullish Outlook?

How Can South Korea, with Costly Investments, Survive Amidst the U.S.-China Confrontation?

Striving to Go Green Economically, Thailand Builds A Resilient Supply Chain with Foreign Investment

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