Industry, Science and Technology International Strategy ... · Equals to NT 2.4 millions More than 12% 2100000 2200000 2300000 2400000 2500000 2600000 ... Success Criteria Data Preparation

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Industry, Science and Technology International Strategy Center

Stephen Su


Industrial Technology Research Institute (ITRI)

2018/8/23

Digital Economy:

Opportunities and Challenges for

Taiwan Service Industry

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1

Agenda

Global Digital Economy Trends

Taiwan Industry Landscape

Challenges & Opportunities for Service Industry

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2

Digital Flows Contribution to the Economy

Source: McKinsey; ITRI/IEK Consulting

(2018/06)

By 2025, Digital Economy to contribute 49% of global GDP

Biz Flow

Financial Flow$People Flow

Data Flow

2012

36%

Global GDP

Digital

Economy 49%

2025

Global GDP

Digital

Economy

* 2016 Global GDP US$75 Trillion. Estimated Digital Economy Market is about US$30 Trillion

* 2016 TW GDP NT$15.87 Trillion. Estimated Digital Economy Market is about NT$6.4 Trillion

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3

Internet Video Contributes Most Data Flow

Source: Cisco VNI (2017/06)

2016~2021 Global IP traffic by application category

Sum of all forms of IP video will continue to be in the range of

80 to 90 % of total IP traffic.

*IP video, which includes Internet video,

IP VoD, video files exchanged through

file sharing, video-streamed gaming,

and video conferencing,

Data Flow

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4

Digital Life Drives Data Flow in Every Domain

Source: ITR/IEK (2017/11)

Services Education Sales

Interior DesignMedicalR&D

Travel Maintenance Translation

Technology enables integration of virtual and physical entity

which facilitate our daily life in a more efficiency way

Data Flow

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5

Digital Twin: Future of Equipment Operation

Source: GE (2018)

Case: By integrating sensors, 3D modelling, and big data analytics to build the digital management platform, GE is able to help its clients to monitor the equipment in real-time and predict its operation.

Integrating AR/VR+IOT+AI technologies

Data Flow

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6

Online Physical Goods Still Growing

Source: eMarketer, Deloitte Research (2017/11)

• Taiwan’s online retail market is about NT$680B, which accounted

13.6% of the total 5 trillion retail market

• 1% of retail digital transformation in Taiwan is equal to NT$50B in

digital economy

Online transactions will account 12.8% of total retail market

by 2019, from 8.6% in 2016, and reach US$3.5 Trillion

Biz Flow

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7

4 Areas of Digital Transformation in Retail

Source: Frost & Sullivan (2017)

Biz Flow

• Perfect Personalization

- 1-to-1 marketing

• Mobile & Ambient Commerce

- Mobile payments, AI enabled

• Immersive Experiences

- Multi-sensory, augumented

• Non-human Agents

- Voice-controlled, AI enabled

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8

Digital Product-Mobile Application Market

Will Continue to Grow

Source: App Annie (2017)

Combined worldwide In-app advertising and app store net

revenue to exceed $189B in 2020, CAGR 22% from 2016

Biz Flow

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9

Source：McKinsey

Digital Technologies Disrupting

Financial Industry in Many Ways

Mobile Payment

Crypto Currency Financial Robot

Crowdfunding

Financial Flow

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10

Financial Robot is Managing our Money

Source: Business Insider Intelligence (2017/11)

Financial robots will be managing over US$1 Trillion funds by 2020

and US$4.6 Trillion by 2022

JP Morgan invests US$52.5M to an AI startup, Anki to develop its LOXM

financial robot for high frequency trade and customer assets management.

Financial Flow

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11

Mobile Payments as the Future

Source: Visa (2017)

Mobile payment will be the major payment tool. It’s expected over US$1

trillion transaction will be paid thru mobile payment by 2020.

Financial Flow

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12

Digital Talent Shortage Today and Near-term

Source: IBM (2017/11)

71529

80265

66000

68000

70000

72000

74000

76000

78000

80000

82000

具備學士/研究所學歷者資料科學與分析專業人才

AV

ER

AG

E A

NN

UA

L S

AL

AR

Y(U

S

DO

LL

AR

S)

Comparison between the highly educated and

digital talent

Equals to

NT 2.4 millionsMore than 12%

2100000

2200000

2300000

2400000

2500000

2600000

2700000

2800000

2015 2020

NU

MB

ER

OF

JOB

S

YEAR

The Digital Talent Demand Forecast: 2015~2020

2,352,681

2,716,425

Demand For Digital Jobs

Will Soar 15% By 2020

Hard to Find the Right Digital Talent.

•IBM projects that by 2020 the number of positions for data and analytics

talent in USA will up to 2.7 millions. The job growth rate is about 15%

compared to 2015.Especially, the demand for both Data Scientists and

Data Engineers is projected to grow 39%.

The High Value Digital Talent is scarce.

•IBM says that the US Data Science and Analytics jobs advertise average

salaries of $80,265 with a premium over all BA+ jobs of $8,736 (+12%).

Bachelor/Master

DegreeThe Digital Talent

People Flow

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13

IT

Skills

Domain

Understanding

Data

Science

IT Infrastructure

Knowing Relevance/

Common Sense

Business Objective and

Success Criteria

Data Preparation

Storytelling

Operational

Requirements

Coding

Analytics Leadership

Data and Analytics

Governance

Quantitative Skills

and Creativity

Graphical Artisanship

Domain Creativity,

Passion and Curiosity

Knowing the

Business Constraints

Analytics Guidance

Source Systems

Best Digital Talent should Equip with

Cross-Functional Skills

• The best big data talent is the critical key staff members that can extract various knowledge from data, have overview of the end-to-end process and can solve data science problems based on the business development goal.

People Flow

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14

Human’s Talent Extension: Augmented Intelligence

Human Intelligence

Human LearningMachine Intelligence

Machine Learning

Enterprises will need to build trust, not fear, to embrace

the evolvement of technology which is augmenting

human’s capability

People Flow

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Key Mega Trend of AI:

Software + Hardware + Wetware (Brain)

資料來源：Perceptio Founder Nicolas Pinto(2017/06); Internet

WetWare

(Brain)

HardWare

(AI Chip)

SoftWare

(AI Algorithm)

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32

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16

Agenda




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17

Taiwan Digitization Index

Source: McKinsey (2017)

Financial services and high-tech, are the most highly digitized sectors

of Taiwan’s economy; while traditional manufacturing sector shows

less digitized

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18

Digitization Level by Sector Taiwan vs US

Source: McKinsey; Gartner (2017)

Taiwan leads in

digitization within the

public sector,

especially in

government and

healthcare.

The US’s much

stronger innovation

capabilities allows it

to occupy a pivotal

position in the global

high-tech value

chain, with a leading

presence in high-

margin software

development, web

services, and

patent-protected

hardware design.

Strong innovation capabilities allows US it to lead the global high-tech value chain

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Take Control of User-centric Ecosystem

User

System

Supply Chain

Commercials/Insurance

Provide Data

Free Product & Services User

Service Provider

羊毛出在狗身上，豬來買單Wool out in dogs, pigs to pay

Source: ITRI/IEK Consulting (2016/09)

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0

10

20

30

40

50

60

70

80

90

0.00 5.00 10.00 15.00 20.00 25.00 30.00

Controlling User-centric Ecosystem to

Accelerate Innovation Scale-up

Note: Bubble size is market cap. Except for market cap which is as of 2016/09/06, all other financial indicators are 2015 data

Value-Add

(%)

R&D BrandManufacturing

User-centric

Ecosystem


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21

Manufacturing Accounts for

About 30% of Taiwan’s GDP

Note: as percentage of GDP

Source: DGBAS; ITRI/IEK Consulting (2017/10)

1.9% 1.9% 1.9% 1.8% 1.8% 1.7% 1.7% 1.8% 1.7% 1.8%

31.1% 30.9% 30.5%33.4% 34.0% 34.5% 33.5% 34.8% 35.1% 35.1%

26.1% 26.2% 25.9%28.8% 29.5% 30.0% 28.8% 30.0% 30.0% 30.2%

67.0% 67.2% 67.6%64.8% 64.2% 63.9% 64.9% 63.4% 63.2% 63.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Primary Sector Secondary Sector (include Manufacturing)Manufacturing Tertiary Sectors

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22

Manufacturing Contributes Significant

Share of Taiwan’s Economic Growth

Source: DGBAS; ITRI/IEK Consulting (2017/10)

1.7%

-2.7%

1.0%

0.7%

-15.0%

-8.2%

1.5%

0.0%

3.4%

1.1%

-9.0%

2.7%

48.3%

57.5%

23.2%

51.6%

-26.0%

46.3%

48.5%

45.2%

72.5%

46.6%

71.0%

59.2%

-40% -20% 0% 20% 40% 60% 80% 100%

2011

2012

2013

2014

2015

2016

Primary Sector Secondary Sector (exclude Manufacturing) Manufacturing Tertiary Sectors

Average 48%

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23

21.9% 22.5%23.7%

25.1%

28.5%30.3%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2011 2012 2013 2014 2015 2016

Manufacturing Value-Added Rate

Manufacturing Production Grows Steadily,

Value-add Continues to Improve

NT$ trillion

Note: (p) Preliminary estimate by ITRI/IEK;

(f) Forecast by ITRI/IEKNote: Value-Added primarily consists of profit before tax and interest, personnel expenses, depreciation

Source: DGBAS; ITRI/IEK Consulting

0.3%

4.9%

-8.2%

-2.0%

5.5%

3.5%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

16

17

18

19

20

2013 2014 2015 2016 2017 2018

Manufacturing production

Manufacturing production change rate (YoY)

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24

Taiwan’s Manufacturing Strives Towards

Upgrade in Value-add vs. Leading Countries

Source: OECD、DGBAS; ITRI/IEK Consulting(2017/10)

36.9

34.5

34.8

23.6

28.5

20

25

30

35

40

2010 2011 2012 2013 2014 2015

Ma

nu

fac

turi

ng

Va

lue

-Ad

de

d R

ate

(%

)

10

15

20

25

30

35

40

45

5.0 7.0 9.0 11.0

（8.7, 36.9）（6.3, 34.5）（10.4, 34.8）

（7.6, 28.5）

（8.5, 24.1）

Capital Investment/Production (%)

Ma

nu

fac

turi

ng

Va

lue

-Ad

de

d R

ate

(%

)

Note: Data for Korea is 2014; Bubble size represents manufacturing output value.

2015

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Taiwan Manufacturing Industry Portfolio by

Value-add (2016)Value Add Ratio %

Capex/Revenue %

Size of the bubble equals

revenue and US$40b.


Note 1: x-axle (Capex/Revenue Ratio %) and y-axle (Value Add Ratio %) @2016

Note 2：( ) 2016 Taiwan industry market share worldwide

Note 3：Manufacturing Industries Value Add Ratio in 2016 calculated based on GDP/gross sum of manufacturing value

IC Design (19.4 %)

IC P&T(55.6%)

Foundry(70.8%)

Memory(8.0%)

Large Size Display(23.7%)

PC(68.5%)

Cell Phone(4.3%)

PV(7.0%)

LED(18.8%)

Machine Tool(4.9%)

High Tech Manuf. Equipment

(7.1%)

Auto(0.5%)

Petrochemical (4.0%)

Med. Device(0.9%)

Automation(5.9%)

Robot(1.3%)

Mid. & Small Size Display (25.2%)

-10

0

10

20

30

40

50

60

70

80

-5 0 5 10 15 20 25 30 35 40

Manufacturing Industries

Value Add Average in 2016: 30.3%

Manufacturing Industries

Capex/Revenue Average in 2016: 8.9%

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26

Taiwan’s ICT Industry Strengths

• NB PC (81.00%)

• Desktop PC (27.34%)

• Motherboards (85.30%)

• Foundry (73.73%)

• IC Packaging & Testing(55.84%)

• Cable CPE (77.11%)

• DSL CPE (65.4%)

• WLAN (67.14%)

• PND (79.7%)

• PCB (30.7%)

• Mobile Lens (50.0%)

• IC Design (17.67%)

• Server (18.3%)

• Large size (>10”)TFT LCD (22.6%)

• Medium & Small size (<10”)TFT LCD

(30.97%)

• IC Substrate (26.4%)

• Tablet (44.8%)

World No. 1 in 2017* World No. 2 in 2017*

World top-2 products/services made by Taiwan

• Completed clusters encompassing ICT industrial value chains

• Center of high-end IT, IC manufacturing and service


*rank by value

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Taiwan Semiconductor Industry Creates

NT$2.3T Revenues, 226K Jobs Indirect: 1.1X Revenues and 2.1X Jobs (2015)

Source: Government Statistics; ITRI/IEK(2016/07)

Industry: 226K

Value Chain: 280K

Service: 199K

Total: 705K

Industry: 2.3T

Value Chain: 1.6T

Service: 0.9T

Total: 4.8T

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28

Service Sector vs Industrial Sector

in Value-add and Productivity

10

20

30

40

50

60

70

80

90

-1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Va

lue

ad

d ra

tion

%

Labor Productivity (Million)

Service Sector Avg. 65.9

Se

rvic

e S

ec

tor

Av

g. 2

.2

Finance & Insurance

Circle Size: Revenue

Retail

Textile

Medical Equip.

Auto & Parts

Medical & Pharmacy

Machinery

Expert Science and technology

Healthcare services

Plastic

Ma

nu

factu

ring

S

ec

tor A

vg

. 5.8

Manuf. Sector Avg. 28.5

Food

Chemicals

Computer & Opticals

: Service

: Manufacturing

Public Services & Military

Transportation & Logistics

Electronic Components

Note: Value add ration=value add/revenue; Labor productivity= Revenue/# of Labor

* Listed of AI related service and manufacturing sectors

Source: DGB; ITRI/IEK Consulting (2017/08)

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29

• Service sector account for 63.1% of GDP in 2016;

Industrial sector accounting for 35.1% (including

manufacturing 30.2%); Agriculture 1.8%

• 11.27 million jobs in Taiwan for 2016: 59.2% in Service

sector, 35.9% in Industrial sector and 4.9% in

Agriculture

• Among different service industries, wholesale and

retailing businesses has the largest value-add at 27.2%,

and the largest jobs at 27.9%

Taiwan Service Industries Key to

Local Economics, Jobs, Salary Improvement

資料來源：行政院主計處、經濟部統計處；工研院產科國際所整理(2018/08)

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30

Agenda




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Human Centric Innovative Brings the Paradigm

Shift via Value Creation

User Value Creation

Breakthrough

Solution /

Technology

Service-based

Business

Model


Value-add:

• User scenario

• User needs

• stakeholders

• Benefit

balance in

ecosystem

Core

Competitiveness:

• Talent

• Technology

• Knowledge

• Management

• Partners

Paradigm Shifts for Taiwan Industry StrategyUser-centric Ecosystem & Soft/Hard Power Fusion

Source: Source: ITRI/IEK Consulting (2017/4)

Software Hardware

Software/Hardware

Integration =

Soft/Hard

Power Fusion =

Soft

Power

Hard

Power

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33

Targeting AI-powered Service Sectors

10

20

30

40

50

60

70

80

90

-1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Va

lue

ad

d ra

tion

%

Labor Productivity (Million)

Service Sector Avg. 65.9

Se

rvic

e S

ec

tor

Av

g. 2

.2

Finance & Insurance

Circle Size: Revenue

Retail

Textile

Medical Equip.

Auto & Parts

Medical & Pharmacy

Machinery

Expert Science and technology

Healthcare services

Plastic

Ma

nu

factu

ring

S

ec

tor A

vg

. 5.8

Manuf. Sector Avg. 28.5

Food

Chemicals

Computer & Opticals

: Service

: Manufacturing

Public Services & Military

Transportation & Logistics

Electronic Components

Note: Value add ration=value add/revenue; Labor productivity= Revenue/# of Labor

• AI “Supply”: Electronic components, Computer and Electronics, Machinery

• AI “Demand”: Retail, Financial & Insurance, Medical and Healthcare, Expert

Services

* Listed of AI related service and manufacturing sectors

Source: DGB; ITRI/IEK Consulting (2017/08)

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Adopt AI as a Multiple Factor (AI x) in Applications

of Both Manufacturing and Service Industries


• The government starts a “Digital Country and Innovative

Economy Development Program”

AI is one of most important items

• Combine with ICT and AI, we have strong competitiveness

in many fields such as:

AI x Smart Retail

AI x Smart Manufacturing

AI x Smart Healthcare

Others

“AI x" will be the key successful factor to master the opportunity in

digital economy

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35

ITRI Case: AI Intelligent Video Analytics Technology

for Smart Retail Services in Unmanned Store

Source：ICL; ITRI/IEK Consulting (2018/07)

ITRI exhibits Self-Checkout Technology at 2018 computex

• Use Computer vision/deep learning technology in

Retail Store Service Process

• Identify user purchases items and quantity

• Use computer vision technology instead of

manual barcodes for checkout process

• Combine with AI based Smart Smart Shelf

Technology

Customer picking status

identification

Using computer vision

technology in self-

checkout

Customer interaction behavior

identification and analytics

Automatic induction

Customer identification

Key Technologies：Face recognition, DNN deep learning technologies …

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36

ITRI Case: Transform Traditional Customer

Service Center into Smart Service Provider

Source: CITC; Source: ITRI/IEK Consulting (2018/07)

Smart Customer Service Robot System Platform

Perception

Expert system, ontology

Machine learning, deep learning

Domain Knowledge

Cross Industry

• Food & Beverage• Automobiles• Others

Peer Industry

• Call Center• Customer Service

System

Machine Learning

Model

Learning

KMS

Inference Optimization/planning, problem solving

Vision, Speech

Overseas Market

• China• USA• South East of Asia

Structure

Data

Unstructured

data

• More than 50

brand customers

• More than 250,000

customer service

information per day

Enterprise Internal

• Training new staff

• Professional customer service personnel training costs time with heavy workload and

high turnover rate, affecting clients’ willingness to renew contracts.

• Using AI, staff only focus on customer’s complicated questions. Increase employees

salary and accomplishment.

• Providing other customer service centers with robot module in SaaS mode

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37

ITRI Case: Big Data Analysis

for Smart Manufacturing • Big data analysis to help improve yield rate for high tech manufacturing

Ex. MOCVD Fault pre-diagnosis

Category:

• Semiconductor process: LED, wafer

foundry, solar panel, and display panel.

• Mechanical Manufacturing: Machine tool

• Petrifaction Manufacturing: oil refining,

plastic material, synthetic fiber, and

textile fiber

Applications:

• Yield Improvement

• Predictive Maintenance (PdM)

• Process Drift

• Virtual Metrology (VM)

Source: ITRI(2016/05)

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38

ITRI Case: IoT-PaaS/SaaS for Manufacturing

IoT-PaaS/SaaS: From edge-computing to move down stream in

value chain towards platform-based solution provider and SI

business models

Database

API server

LearningNetwork

Stream

New productProduct

Gateway

Factory

Assess production performanceFind root causesCustomer relationship management

Return

Report

SaaSPaaSGatewayController

+ MachineIPCIC

Companies

盟立控制器

Source: ITRI(2017/01)

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From “Manufacturing” to “Infofacturing”

Potential

Players:

Terminals &Components

Network

Cloud

SystemIntegration

Model 2:

Original

System

Manufacturing

Quanta,

Hon Hai,

etc.

ODM

OSM(OriginalSystem

Manufacturing)

Model 1:

Service-based

Solution

Provider

Advantech,

Delta,

etc.

SolutionProvider

Service-based

SolutionProvider

Model 4:

Service

Integrator

7-11,

YouBike,

etc.

ServiceProvider

ServiceSystem

Integrator

Applications& Services

Model 3:

Service-based

Brand

Acer, ASUS,

HTC,

etc.

Service-basedBrand

Brand

Source：ITRI/IEK Consulting (2016/09)

ITRI Case: Solutions for Smart Healthcare

NPNS Sensor ECG Patch Asthma

DetectorWearable

NPWT

UWB Bio

Sensor

Cloud Fitness

Trainer System

ITRI Healthcare Application Sensor Technology and Device

Wearable

Contactless

Radar Sensor

Soft patch

affixed to the

body between

the chest and

abdomen

Capture

Breath sound

signal from

the neck to

breathe

Integrate the

Vacuum pump

&Special

patch

Contactless

Sensor to

detect Breath

Integrate

Wearable Device

& Camera Motion

Sensing

Technology

Technology Transfer & Cooperation：HOLUX, IMAGER-37, NTUH, Taipei Chang Gung Memorial Hospital…


ITRI Smart Living Application Sensor and Device

Wearable Alcohol Detector Home Energy Management System

ITRI is aggressive to

transfer sensing

solution/technology to

industry and cooperate

with ICT companies and

various hospitals

40

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Appendix

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42

Stephen SuVP & General Director


Industrial Technology Research Institute (ITRI)

Professional Experiences:

Principal, Roland Berger Strategy Consultants, Shanghai

Sr. Director, Consumer Electronics BU, Primax Electronics Ltd., Taipei

Sr. Director, Corporate Development, Primax Electronics Ltd., Taipei

Case Leader, Boston Consulting Group (BCG), Hong Kong

Applications Engineer, Semiconductor Group, Motorola, Phoenix

Professional Specialty:

Strategy, operations Improvement, organization change management, business process redesign,

new product development and marketing, investment due diligence, manufacturing management

Chairman of Committee on Policy and Legal, Cloud Computing & IOT Association in Taiwan (CCAT)

(2010-Present)

President, Asia Pacific Industrial Analysts Association (APIAA) (2017-Present)

Consultant Committee of Science & Technology Policy Research and Information Center (2015-

Present)

Taiwan Food and Drug Administration(TFDA) Food Safety Technology Project Performance

Evaluation Committee

Ministry of Economic Affairs(MOEA) Industrial Development Advisory Council Multiple patents in

power switching control and mobile phone applications

Documents

Industry, Science and Technology International Strategy ... · Equals to NT 2.4 millions More than 12% 2100000 2200000 2300000 2400000 2500000 2600000 ... Success Criteria Data Preparation