Interview with Wang Ying-yu, Director of the Industrial Innovation Division, Board of Science and Technology, Executive Yuan, and Yang Yao-joe, Director of the Taiwan Instrument Research Institute, National Applied Research Laboratories
Taiwan boasts the most superb science and technology in the Western Pacific region. In the north is Hsinchu Science Park, the location of TSMC headquarters and the country's cutting-edge semiconductor industry. In the central region along the base of Dadu Mountain are precision machinery industry clusters formed by long-lasting companies. With government support, the machinery industry has quickly grown into a trillion-dollar (NTD) industry and continues to transform at an accelerated rate. It is now the lifeblood of Taiwan's economic development alongside the semiconductor industry, both of which have helped the country remain unshaken amidst the turbulent global economic and industrial changes caused by the pandemic.
The Smart Machinery Industrial Promotion Program approved by the Executive Yuan in 2016 has been a vital force in driving the upgrade of precision machinery to smart machinery. As the world entered the era of Industry 4.0, the Taiwanese government seized the opportunity to launch three strategies for the development of smart manufacturing—"Connecting the Country,” "Connecting to the Future," and "Connecting to the World"—in hopes of turning Taiwan into Asia’s hub for high-end manufacturing. Policies were rolled out to help small and medium-sized manufacturing supply chains integrate AI technology, while flexible manufacturing systems were created to help supply chains efficiently respond to customer needs and compete in the international market.
Innovative Planning turns Smart Machinery into a Trillion-Dollar Industry
In 2018, President Tsai Ing-wen traveled to Taichung to visit the Intelligent Manufacturing Pilot Production Site. During her visit, she remarked, "Among the industries in the 5+2 Industry Innovation Plan, smart machinery has made the quickest and most efficient progress and produced the most tangible results. It has become a trillion-dollar (NTD) industry in Taiwan." The Smart Machinery Industrial Promotion Program is what allowed Taiwan to adapt to global high-mix, low-volume production models and conform to trends in real-time big data analytics despite the impact of last year's China-US trade war and the COVID-19 pandemic on the global manufacturing industry. Taiwanese businesspeople were moved to return, while supply chains were re-organized. As a result, Taiwan has become an important global partner in alleviating labor shortage due in part to its automated equipment and robotic arm production.
There are presently dozens of smart machinery-related factories in Taiwan. Thanks to the integration of AI into traditional precision machinery, its high-end smart manufacturing industry is catching up with the advanced technology manufacturing industries of the United States, Germany, and Japan. In 2017, the yearly output value of Taiwan's machinery industry exceeded one trillion New Taiwan Dollars, making it the country's third trillion-dollar industry after semiconductors and panels.
The Executive Yuan Board of Science and Technology (BOST) plays a key role in the promotion of smart machinery and the development of policies and major projects. Wang Ying-yu, Director of the BOST Industrial Innovation Division, has been deeply involved in policy planning and implementation. He noted that the majority of Taiwan’s mechanical equipment, machine tool, and machinery industries are small and medium-sized enterprises (SMEs) that predominantly use traditional methods of manual record-keeping in production and management. In order to ease the precision machinery industry towards Industry 4.0, the government will merge robotics, IoT, and big data with traditional machine manufacturing industries through developments in the ICT industry. This will advance the digitization of precision machinery and usher in a new generation of modes in smart manufacturing.
As a national research institution, the Taiwan Instrument Research Institute of the National Applied Research Laboratories (or TIRI, NARLabs) has long been committed to the research and development of smart machinery technology and increasing the industry's practical value. Yang Yao-joe, Director of TIRI, NARLabs, pointed out that a crucial component of successfully digitizing precision machinery is the introduction of cyber-physical systems (CPS). Yang believes that CPS can bring factory manufacturing and market demand together. This would help factories manufacture products in line with market demand. TIRI, NARLabs and the Ministry of Science and Technology (MOST) have jointly promoted projects related to smart machinery sensor modules, robot modules, internet networks, and controllers. It is hoped that equipping machines with perceptive and intelligent capabilities will expand the possibilities of smart manufacturing. Yang also commented, “The massive amount of data generated by integrating AI into all machines and applying IoT and CPS towards smart manufacturing will increase the risk and significance of information security issues (e.g., personal information and privacy). Therefore, as of last year, policies have been enacted to promote the development of security-related specifications for smart manufacturing sectors such as IT (Information Technology, includes computer rooms, offices) and OT (operational technology, includes machinery and equipment production plants). Such initiatives will help domestic SMEs with limited resources and manpower to gain an awareness of information security issues and create protective solutions.”
Crossing Over to Complete a New Smart Machinery Ecosystem
With the power of domestic ICT technology, the Taiwanese government has spearheaded efforts to transform the precision machinery industry into a smart machinery manufacturing industry. Traditional machinery equipment companies are increasingly able to provide overall solutions, giving them an advantage in competitive differentiation. This has fulfilled the government's goals to improve the digital capabilities of SMEs and to export entire plants and lines overseas. It has also realized their visions of industrializing smart machinery and integrating smart technology into industries, the results of which will speed up the completion of a comprehensive smart machine ecosystem in Taiwan.
Efforts to integrate AI into industrial manufacturing infrastructures are speeding up worldwide. Wang believes that Taiwan's recent move to introduce integration-related technology is no mere trend. Only by applying AI can supply chain management efficiency and response time to market needs be improved. In order to construct a new smart machinery ecosystem, the government has designated the digitization of traditional enterprises as its top priority. It has assisted traditional factories with upgrading dated machinery into internet-networked equipment and is expected to link 9,100 pieces of equipment within five years (2018-2022). Wang stated that this is essential to improving the digital capabilities of SMEs. Smart set-top boxes are currently replacing manual record-keeping. The introduction of internet-networking, visualization of production management, and application of smart technology are also being utilized to improve digitization. This will enable managers to view the status of factory production as well as analyze or troubleshoot issues in real time. The data accessibility provided by smart set-top boxes has improved production line efficiency in many companies.
Yang has analyzed that Taiwanese supply chains are composed of one continuous line. The detailed task of processing components often involves multiple procedures. Since they cannot be accommodated by standard procedures, workflow progress has become the focus of management. The government has responded by providing customized guidance in areas such as sensor installation in traditional mechanical equipment. Network transmissions and real-time data analysis are also being used to encourage the machinery industry to resolve their problems through digitization. Optimizing smart manufacturing, integrating AI into manufacturing equipment, and establishing AI detection and application service modules are the only means to ensure smooth, smart communication between machines and to promote cross-factory integration between upstream suppliers and downstream clients.
A Smart Machine Capital Built on Cross-Domain Industry-University-Academia Integration
In the past, the precision machinery factories by Dadu Mountain, Taichung were viewed as family-owned companies. In recent years, under the government's active promotion of smart machinery, these small and medium-sized manufacturing supply chains are shifting from precision machinery to smart machinery manufacturing. This process involves three stages: 1) the visualization of digital equipment/production line information to improve the digitization capabilities of SMEs; 2) the digital optimization of smart manufacturing capabilities to assist smart application upgrades in the manufacturing industry; 3) the digital transformation and creation of new manufacturing processes to build a benchmark enterprise in smart machinery.
Taichung is the only manufacturing hub in the world that can produce machine tools, auto parts, and aerospace satellite industrial parts in the same block. It is also the only city that boasts manufacturing centers with AI technology in production lines, software, robotic arms, and systems integration. The city has become a capital of smart machinery and an important means for Taiwan to compete at a global level.
The government has aided manufacturers to upgrade to smart manufacturing by subsidizing 230 companies in upstream, midstream, and downstream supply chains as well as 53 small and medium-sized manufacturing companies across 15 industries including machine tools, textiles, and automotive parts. MOST's Smart Machinery Industrial Promotion Program will aim to facilitate the upgrade and digital transformation of domestic industries. It will also strive to boost industry-university-academia collaboration by fostering long-term, cross-domain talent investment projects in fields such as power mechanical engineering, automation, controls, industrial engineering, and resource engineering.
Wang remarked that talent is the keystone to the continued promotion of smart manufacturing. 2017 marked the launch of the Intercollegiate and Interdisciplinary Smart Manufacturing Teaching Strategies Alliance. Its purpose was to integrate teaching resources across domestic universities and colleges and work with the Ministry of Education (MOE) to create course materials on smart manufacturing. The resulting Smart Manufacturing Interdisciplinary Curriculum featured jointly-developed common teaching materials on the subjects of IoT, sensors, big data, and operation management. To date, twenty schools in Taiwan have made use of these materials. Students in smart manufacturing-related fields are required to become proficient in basic mechanical knowledge and to gain practical skills in manufacturing and communication technology through industry-university internships. Wang stated, "The MOE has begun to promote industry-university collaboration in technical colleges such as science and technology universities. This has given students the opportunity to gain first-hand experience in the smart machinery industry and acquire in-demand knowledge and skills. Additionally, the Ministry of Economic Affairs has overseen the creation of industrial skill courses and utilized course certifications to streamline talent recruitment.”
Yang also believes that rooting talent cultivation in academia will be conducive to promoting smart manufacturing and emphasizing the importance of inter-ministerial collaboration. MOST’s Smart Machinery Industrial Promotion Program is one such collaboration between TIRI, the National Center for High-Performance Computing (NCHC), the Science & Technology Policy Research and Information Center (STPI), and the Taiwan Semiconductor Research Institute (TSRI). Its aim is to digitize and introduce AI technology into the machinery industry. To-date, thirty academic R&D teams have been recruited for the program. In one case, TIRI assisted academics with constructing a sensor platform. NCHC next created series circuits to develop a demonstration platform where the TSRI and STPI would jointly introduce AI, IoT, big data, and other technology into smart machinery development. Meanwhile, academic-developed products were directly sent to the testing area. Industries were invited to participate in hopes of promoting the industrialization of R&D results. Yang commented that helping the industry resolve transformation-related issues is the government's top priority. The Smart Machinery Industrial Promotion Program is meant to promote projects and harness academic R&D in order to assist in the transition of traditional factories into smart manufacturing. An academic research achievement exhibition organized by MOST in May 2021 featured a technical service platform built through industry-university-academia collaboration and corporate value-added methods. This not only strengthened ties between technology R&D and industrial applications, but also provided a more complete, integrated outline of upstream, midstream, and downstream smart machinery technology.
Taiwan Strides Towards Becoming Asia's Hub for High-End Manufacturing
Amidst tremendous global changes arising from Industry 4.0, the transformation of precision machinery in Taiwan has yielded immediate and visible results. The country is home to complete machinery industry supply chains and is the world's fourth-largest exporter of machine tools. It has also produced superb achievements in the ICT industry. Between 2016 and 2020, the Taiwanese government invested NT$15 billion in the Smart Machinery Industry Promotion Program and continues to promote innovative technology such as cloud technology, AI, and IoT, as well as important R&D and talent cultivation initiatives.
The efforts of the government and industries came to fruition in 2017 when the smart machinery industry successfully became a trillion-dollar industry. In addition to organizing a smart manufacturing coaching group composed of 84 experts and 222 system integrator (SI) technical service machinery groups, 752 manufacturers have provided free consultations and technical services for the past two years. The government has also created benchmark enterprises to facilitate the participation of twenty manufacturers in six cases in the fields of aerospace, automobile and motorcycles, footwear, plumbing, and hand tools. Model shifts will be promoted over the next three years and are expected to bring nearly NT$10 billion in investments.
Building a new ecosystem for the smart machinery industry will involve accelerating upgrade of the precision machinery industry and improving infrastructure to accept overseas business orders. This will enable Taiwan's smart machinery industry to join the international supply chain and fulfill the country’s goal to become a global hub for smart machinery R&D and manufacturing. System integration and international sales and services will also be continuously fortified through smart manufacturing. Additionally, Taiwan will become a comprehensive solution provider in the field of terminal applications. By upgrading the software and hardware equipment of domestic industries, Taiwan can expand and enter the global smart manufacturing market (e.g., Europe, the United States, Japan, South Korea, and Southeast Asia.) These efforts will lead Taiwan to become Asia's hub for high-end manufacturing.