Taiwan is recognised globally for its profitable and innovative high-tech electronics industries. Helen Carmichael talks to honorary chairman of Taiwan’s BOC Lienhwa, John Miao, about how the company has stayed one step ahead in this fast-paced growth business.
During the 1960’s and 1970’s the Taiwan economic structure evolved from handicraft into light industry. Oxygen and acetylene supplied by Lien Hwa Industrial Corporation (LHIC) to the light machinery industry and to the steel industry contributed to this critical transition.
“During the 1980’s when the heavy industries, the petrochemical industry and the high technology industries were developing as part of the 10 major government construction programmes, we again played a major role through the supply of high quality nitrogen and argon,” John Miao explains. The company supplied industries such as steel and petrochemicals in the 1980’s, and as Taiwan’s industrial interests shifted to include semiconductors in the 1990’s, the company followed suit by supplying speciality gases for this industry too.
Meanwhile, UK-based BOC also experienced significant increases in sales of nitrogen and speciality gases during the 1980’s in particular to the electronics industries. In 1984 Lien Hwa Industrial Corporation (LHIC) and BOC formed a joint venture, BOC Lienhwa Industrial Gases (BOCLH), which has gone on to become a leading supplier to virtually every sector of Taiwanese industry, including electronics, engineering, chemicals, petroleum, marine, aerospace, metallurgy, healthcare and food. LHIC was Taiwan’s largest gas supplier and BOC stood to benefit from the venture by sharing the company’s significant local knowledge and customer base.
Today, BOCLH operates five air separation units (ASUs) around the island. Of these, 4 are highly efficient, computer-controlled plants producing high purity gases required by electronic customers. “The latest YunAn plant designed by BOC Process Plant and installed by BOCLH uses the cold energy from liquid natural gas (LNG) to produce nitrogen and argon,” says Miao. Trends in demand for speciality gases are constantly shifting in the electronics industry, as the business adapts to supply new technologies such as TFT-LCD and increasingly, solar cells. BOCLH has established a special gases manufacturing and laboratory centre in Taoyuan, which produces high purity gas mixtures and calibration gases to stay a step ahead of modern industry’s latest requirements.
The recent Linde-BOC merger means that BOCLH benefits from Linde’s research and development efforts in gases application technology. “This technology can help domestic industries lower their production cost, improve the quality of their products, increase productivity and in general raise the technology level of the industry,” Miao notes.
Investing in the future
In the early 1990’s the company made some big investments, including the first semiconductor gas plant approved in Taiwan and major nitrogen production and pipeline expansions.
In 2002, BOCLH more than doubled its in-house nitrous oxide manufacturing capacity at Yung Mei to meet increasing demand from Taiwan’s major wafer fabrication plants and regional semiconductor and LCD screen producers. The company supplies this high-purity gas in either cylinder or bulk format.
BOC Edwards began work on major bulk gas investments in the Taiwan electronics sector with 7 gas plant facilities to ensure bulk gas supply to 9 new semiconductor and flat panel display manufacturing fabricators, with BOCLH’s reputation, local relationships and expertise playing an important role in developing the $75m investment.
Through BOCLH, BOC Edwards has also reinforced its nitrogen pipeline infrastructure by building many ultra high-purity N2 gas generator plants to supply the expanding Hsinchu Science Park. The science park accounts for around 10% of total global output of semiconductor devices, more than 80% of wafer foundry capacity, and is home to more than 325 high-tech companies. “BOC Lienhwa and BOC Edwards are successfully meeting these customers’ needs because, through very close customer collaboration, we are able to anticipate requirements,” Miao commented when the investment was announced. The pipeline has been vital to Hsinchu’s success in the semiconductor manufacturing arena, supplying over 100,000 Nm3 per hour of N2 via an underground network extending over 40km.
Providing a reliable, yet flexible supply position is essential in an industry notorious for its fluctuating demand. The pipeline, together with the February 2006 ultra-high purity liquid nitrogen plant start up at the science park, mean that high levels of products can be made available.
The rise in demand for flat panel displays led BOC Edwards to invest, through BOCLH, BOC in 4 new nitrogen plants for customers in Taoyuan, Hsinchu, and the Tainan Science Park in 2004 and 2005.
Almost half of BOCLH’s sales are to end users in electronics and IT, for applications such as semiconductors, TFT-LCD screens, solar cells, or DRAM memory. Over a third of sales are to bulk customers in the steel, glass, food, petrochemical and other heavy industries, with the remainder made up of packaged gas, cylinder gas and healthcare products. The strength of small-to-medium sized industry in Taiwan means that demand for packaged gas remains strong in comparison with other countries in the region.
The company has grown at a consistently healthy rate: “Over the past 10 years, BOCLH’s operation margin CAGR (compound average growth rate) has been over 8% CAGR (compound average growth rate),” says Miao “in comparison with a 4% GDP growth rate Taiwan.”
Because Taiwan is leader of the IC and TFT-LCD industry worldwide, most BOCLH sales are in Taiwan. “But China is a key major economic player globally.” There are important links between the growing Chinese industry and Taiwan, and BOCLH is involved with customers there through BOC and now since the merger, through Linde also. A contract with a major global IT industry player is just one of BOCLH’s new opportunities in China, Miao suggests.
The Linde Group has consolidated a position as the leading industrial gas supplier in the Asia-Pacific region. The establishment of the region’s head offices in Hong Kong and Shanghai, together with expansion of its production base, are a clear reflection of the Group’s commitment to a region that accounts for nearly one third of it’s total worldwide sales, Miao suggests. “One of Linde’s strengths based on its world wide presence is its ability to network around the group,” says Miao. “This is particularly valuable for our customers in Taiwan.”
Indeed BOCLH is a key intermediary between Linde and customers in countries such as China, Singapore and Japan in the Pacific region, helping to supply key staff and expertise in specialty gases and to secure new business.
“BOCLH maintains a very good relationship with all other gas company worldwide to serve all our customers no matter whether they are local or overseas,” Miao says. “This BOCLH talent has led to continued improvement of customers capabilities and services which also benefits Taiwan industry in general.”
BOCLH provides customers with extensive technical support covering both gas application and specialized technologies, designed specifically to meet the requirements of the electronics and other advanced processing industries.
“Technology in Taiwan changes and improves daily,” Miao says. “However, industrial progress and growth is hampered by our heavy reliance on the importation of raw materials.” Nowhere is this more apparent than in the process and laboratory use of speciality gases. BOCLH believes it has risen to this challenge through the quality of its offering for semiconductor manufacture, pollution control and monitoring, analytical instrument calibration, ultra high purity for research, plus a variety of mixtures for lasers, welding and diving.
To compliment its gas products the company also offers a range of gas equipment and, with particular emphasis on the semiconductor industry, can provide a complete gas installation supply package to the highest standards. The company aims to keep its customers up to date with the latest gas technology information via catalogues, gas data sheets and presentations from local and overseas guest speakers. “Through close ties with our customers it is LHIG’s aim to provide the best possible service and develop speciality gases for their every need now and in the future.”
The company has island-wide service centres in the northern, central and southern area of Taiwan, providing on-site, emergency and scheduled maintenance. “For high-tech customers, high quality after-service is very important,” says Miao. He believes the company’s history of commitment to superior repair and maintenance has consistently led to customer satisfaction. BOCLH has invested heavily in repair and maintenance equipment, overseas staff training, and has organized a team of highly experienced engineers to provide both repair and maintenance services.
A comprehensive service for customers includes tank installation, testing & inspection and commissioning. “Our installations are inspected regularly by our engineers to ensure that they are in safe condition and are operating at optimum efficiency,” Miao says. The company also strives to answer customer’s questions on gas use, accurately and promptly.
Looking to the future
Miao indicates that the company’s aims include TQM (total quality management) and SIX SIGMA to ensure continuous improvement in all activities, products and processes, delivery and after-sales service. He is also looking forward to investment in new technology to improve upon current products, new process innovation to create more applications offering future energy solutions and services, while developing new products and applications to meet customers’ needs. Promoting safe and environmentally friendly products also comes high on the agenda.
Internationally, the company has expanded its capability and invested to serve an expanding Chinese economy. Chinese customers include TSMC, UMC, SMIC and Intel’s first 12” wafer plant in China. “In response to semiconductor gas specifications released by ULSI manufacturers in Taiwan and China, we have established an electronic development and delivery centre at TaiChung Harbor (central Taiwan),” Miao says. This move is to ensure BOCLH maintains its leading position in the next 5 years.
Ingredients for success
“Our success will be built on our absolute dedication to the satisfaction of our customers through constant innovation, operational efficiency, cost effectiveness and the talents of our people, wherever we operate around the world,” Miao states. BOCLH’s business approach is to offer a “ total package” incorporating gases, equipment technology and after-sales service that has proven effective and cost effective in satisfying its customer’s needs.
Driving industry in the next few years, Miao highlights the issues of energy and climate change. He has already seen a significant growth in the photovoltaic industry in the last year. “In our opinion, photovoltaic will continue strong growth over the next 5 years,” he says. “By 2015, hydrogen has a good opportunity to be a major energy gas,” he says, noting Linde’s advanced liquefied Hydroxyl technology and collaboration with BMW in hydrogen fuelled cars.
BOCLH manufactures primarily cryogenic equipment and systems for domestic use and export to countries in Europe, America and Asia. Design standards and manufacturing methods are in accordance with the ASME Code. “Furthermore, we have organized a team of experienced and highly skilled technicians, ready to offer design and testing service to customers,” Miao adds.
“BOCLH operates with high regard for safety and the environment, working to the high international standards of the Linde group, which has made BOCLH a leader in these fields in the Taiwan industrial gas industry,” Miao explains. BOCLH has now adopted the Linde group SIX SIGMA and Total Quality Management Program (TQM), as well as ISO9000 programme, “to ensure a reliable service in our daily operations to meet all customers needs”.