Before and after the millennium: productivity analysis of the supply chain of Taiwan's IC industry

Taiwan's Integrated Circuit (IC) industry has achieved excellent performance in the past decades. However, it has also consumed a lot of national resources in both human capital and financial capital. National valuable resources are limited and, as such, allocating resources to the most effective sector is critical for enhancing national competitiveness further in the future. This study adopts the Data Envelopment Analysis (DEA) method to evaluate the production efficiency of Taiwan's IC subsectors. 10 years of data, from 1995 to 2004, have been used to conduct the research. The productivities before and after the year 2000 are compared to see if there are any differences between the periods of economic upturn and downturn. The analysis finds that the IC design sector is the most worthwhile one in which a country's treasurable resources can be invested. However, the IC manufacturing and IC testing/packaging sectors are inefficient over an economic downturn due to their heavy capital investment. The results provide some insights for policy-makers.