IBM opens xSeries server development center in Taiwan

August 4, 2004

IBM, the world's leading information technology company and global sales leader for Internet servers, announced the opening of the IBM eServer xSeries Taiwan Development Center (xTDC) in Taipei in early July. The xTDC will focus primarily on the development and design of xSeries server platforms using the Intel Xeon processor. IBM has chosen to base this new development center in Taiwan so as to take advantage of the country's complete information technology hardware supply chain, IBM's close partnerships with Taiwanese hardware manufacturers and strong government support. IBM, Taiwan's government and the local IT industry all look forward to the role the center will play in upgrading Taiwan's IT industry from a manufacturing center to a base for innovation and R&D.

The xTDC will develop entry-level and mass production xSeries server models, focusing in particular on innovative solutions for tower- and blade-style servers. As Taiwan's R&D capabilities are strengthened, IBM does not rule out transferring R&D tasks for higher end models to Taiwan. In addition to working on product development, the center will also conduct market research. The center intends to release its first product before the end of the year.

Based in the Nankang Software Park, the center will ultimately employ 100 personnel, 80 to be hired in Taiwan and 20 foreign employees (ten permanent and ten who will make regular visits from abroad) from IBM's headquarters in the US. The personnel hired in Taiwan will be sent to the first IBM xSeries R&D center, based in Raleigh, North Carolina, for intensive training. IBM reports that the hiring process is nearly complete.

IBM already has fifteen server R&D centers around the world, but the xTDC is the only IBM development center for the popular xSeries server outside of the US. IBM's decision to locate the center in Taiwan reflects the importance of Taiwan to the world's IT hardware industry and helps further integrate Taiwan into the IBM team. Though IBM has opened both a biotech research center and a software center in Taiwan over the last couple of years, this is IBM's first major R&D investment in the nation's IT hardware industry.

Headed by Rodney Adkins, vice president of development, IBM Systems and Technology Group, the press conference announcing the center's opening was attended by high-level government officials who worked to promote the launch of the center, including Minister-without-Portfolio Lin Yi-fu and Vice Minister of Economic Affairs Shih Yen-hsiang. Also in attendance were top-level executives from many of IBM's domestic and foreign IT partners in Taiwan, including Wistron, Giga-byte Technology, Micro-star International, Asustek Computer, Hon Hai, AMD, Broadcom, Phoenix and Intel. The presence of so many major players demonstrates the influence of this center on Taiwan.

Of the USD 89 billion in revenues IBM posted in 2003, 32% was generated by IT hardware sales. The xSeries servers are experiencing the fastest growing sales of any IBM server series. IBM considers Taiwan the most suitable country for server development work due to its strengths as an IT hardware manufacturing base. IBM sees great potential in Taiwan for the conversion of existing personal computer manufacturers into server makers.

The scale of the global server market has grown to a massive USD 50 billion per year. IBM hopes the center will help Taiwan to grow from a manufacturing base to a center for R&D and innovation, and allow Taiwan to move another step ahead by assuming a role as a driving force in the advancement of global server standards.

According to IT research firm International Data Corp. (IDC), global server sales will climb to 7 million units by 2007. IDC predicts the global server market, driven by the resurgence of corporate demand late last year, will grow by 5 percent this year to US$53 billion and will maintain an average yearly growth rate of 3.8 percent to reach USD 60.8 billion in 2008. IDC also expects Taiwan's domestic server market to grow from USD 211 million this year to USD 327 million in 2008. According to IDC, IBM maintained its hold on the number one position in the worldwide server systems market with a 29.7 percent market share in factory revenue in the first quarter of this year. It was followed by Hewlett-Packard Co. and Sun Microsystems.

MOEA statistics reveal that Hewlett-Packard and Dell, at USD 16 billion and USD 7 billion respectively, posted the highest values of procurements in Taiwan in 2003. IBM, Sony and Apple shared the third spot ranking, each racking up procurement values of around USD 5 billion.

(Economic Daily News, Taipei Times, Digitimes)

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