Guo made the remark in a recent interview with the Chinese-language Economic Daily News (EDN), a sister publication of the Taiwan Economic News (TEN). As an IDM, he said, Hon Hai will move into a number of cutting-edge technological fields, including LEDs (light emitting diodes), photovoltaic components and parts, human/machine interface, precision machinery, nanotechnology, digital certification, digital compression, biotech medicine, and Internet communications.

 

For instance, Hon Hai will invest in next-generation building materials for smart houses: LED heat-insulated glass, nanotechnology Internet wires, and production pertaining to environmental protection and energy conservation, among other areas.

 

To boost its progress toward becoming an IDM, Guo commented, Hon Hai has been endeavoring to build a solid foundation of patented technologies over the years - even in the current economic downturn, with the company continuing to recruit R&D engineers and other personnel in sharp contrast to the R&D spending cuts that are being carried out by most other firms.

 

"Hon Hai should focus on basic technologies and think about how to grow wheat and produce flour, rather than making buns today and dumplings tomorrow," Gou stated.

 

The company's R&D effort has begun to bear fruit. Gou pointed out that the number of the company's accumulated patent applications has been growing at a compound average rate of 32% per annum in the recent eight years and now stands at 59,300, of which 26,000 have been approved. In Taiwan the company has been the patent champion, in number of both applications and approvals, for six years in a row. It also took 22nd place in the number of patent approvals in the U.S. last year.

 

The makeup of the patents granted to Hon Hai has undergone a major change in nature over the years. The share of invention patents rose to 78% last year, compared with 27% 10 years ago, a testimony to the company's improved innovative capability.

 

In addition, the contents of the company's patented technologies have also become more diversified and now encompass Internet communications, precision optics, wireless communications, LEDs, flat panel displays, nanotechnology, and PCs. This is much different from the situation 10 years ago, when 94% of the firm's patents were related to connectors. The share of connectors dropped to 24% last year. The share of nanotechnology patents hit 4% last year, ensuring the ownership of technology that will be applied in the materials, biomedicine, and photovoltaic industries.

 

In fact, Hon Hai has begun to reap royalties from its intellectual property, with the accumulated amount of such income having topped NT$200 million as of last year. Guo noted that the company will continue to make heavy R&D investments in such fields as nanotechnology and biomedicine in the next five years.

 

Guo pointed out that the company's R&D deployment today is critical to its future, noting that it takes five to 10 years to complete the process from R&D to patent application to commercialization. He stressed that patents are important assets for an enterprise in this knowledge-based era-lamenting, however, that his company's wealth of patents has yet to win the acknowledgement of investors, especially small ones.