Pictured above: Founder and Chairman of Adventech, Cheney Ho. Photo: Techtime
Chaney Ho in a special interview for Techtime: “The next nightmare for chip manufacturers will be oversupply. China’s collision course with the free world is a disaster for its economy. Israeli PoC ideas create new global markets”
Advantech Company (Advantech) is the Taiwanese supplier of industrial and hardened computers and industrial embedded systems from the largest in the world. The company is traded on the stock exchange of Taipei, the capital of Taiwan, with a value of approximately $8.2 billion, and in 2021 its sales amounted to approximately $2.1 billion. The company was founded in 1983 by Chaney Ho, who serves as the company’s chairman ever since. Ho came to visit Israel as part of the Taiwanese innovation program IP² LaunchPad in Israel, of which he is one of the operators. In a special interview with Techtime, he shed an extraordinary light on the technology industry in an era of pandemic and growing geopolitical tensions.
How does the tension between Taiwan and China affect Advantech’s activity and strategy?
“The Chinese economy in the last 20 years grew at a very high rate and reached an average of about 10% growth per year, but now it is in a slowing trend and this year it is expected to grow by only about 3%. The Chinese market is very important for us and about 29% of our sales are to China, half of them to the infrastructure fields and half to the manufacturing industries. The trade war with the US has greatly affected Chinese exports, which are on the decline. This has a profound effect on the manufacturing industries, and some business has returned to the countries of origin Japan, Korea and Taiwan. Despite this, China is still an important market for us, and the tensions between Taiwan and China still do not affect us.”
“The chip law weakens the Chinese military”
“This may have a long-term effect: if China continues to be in conflict with the free world, such as its support for Russia, sanctions and a further slowdown in the Chinese economy should be expected. Even in this case the impact on us will not be decisive: our strategy is clear: 50% of the production will always remain in Taiwan, and the rest of the production resources will be distributed. The idea is not to put all your eggs in one basket. It is true that we have a production plant in China, but if sanctions are imposed on China, we can move the production to other sites in Asia, Europe or the USA”.
How are you affected by the Chips Act (CHIPS Act) that was passed in the USA?
“The chip law has two main components: the first is support for the establishment of chip manufacturing infrastructure in the US, and the second is sanctions designed to suppress the Chinese chip industry. The law prohibits the sale of technologies and advanced equipment for the production of chips with a node size of less than 22 nanometers. This law weakens the Chinese army and harms its ability to purchase advanced chips.”
Cheney Ho (on the left) together with the Israel Sales Manager at Adventech, Ilan Berkovich
“Manufacturers of advanced equipment that have factories in China will be forced to leave it and transfer production back to Japan, Taiwan and the USA. In my estimation, this component of the law will have a very large impact on China’s industrial and military capability. We are not affected by this law, as our manufacturing plant in China only produces basic products. The most advanced computers are manufactured in Taiwan itself.”
How are you affected by the global crisis in the supply chain and the shortage of components?
“The supply chain problem is not critical because the demand for computers is now declining. In the last two years there was a very large demand for computers due to the Corona epidemic and this created an excess demand for components. However, the epidemic is ending and I estimate that within six months the problem will disappear. In the past we purchased a large inventory of components that we still use and that will last us at least another six months. It should be remembered that today more than 50 new production plants are being built in the world. Of these, about 20 factories are in Taiwan. They will be completed in two to three years, and then there will be an oversupply of components. It will be a nightmare for the chip industry.”
You were the first company to announce a focus on IoT. Did the advent of artificial intelligence affect this perception?
“The new growing fields such as artificial intelligence, Industry 4.0 and autonomous systems are very good for us. They need integrated computers that include CPU and GPU, we want a very large growth of this type of computers (AIoT) in the coming years as well. The price of the average of the systems is also growing. Artificial intelligence is a gift that accelerates our businesses.”
What is Israel’s place in Adventech’s activities and programs?
“The Israeli market is very important. Although there is a limited team here, sales in Israel make up about 5% of our sales in the world. We have very large clients here, such as Orbotech, Applied Materials, Check Point and more. Israel has a special weight in the industry thanks to the fact that many markets in the world are created following ideas at the Proof of Concept level that came out of Israel. We are open to the possibility of making a purchase here, although at the moment there is no specific target company”.