Silicon Valley Firms Relocating to Taiwan
Silicon Valley entrepreneurs who want to take their companies public are increasingly heading to Taiwan instead of launching initial public offerings in the U.S.
So far this year, more than 100 companies in Taiwan have had IPOs, which allow employees and venture capitalists to cash out stock they received while the company was young and privately financed.
In the San Francisco Bay Area, a bastion of IPOs until the Internet stock bubble burst in 2000, only nine companies have gone public this year. As many as 20 Bay Area companies have relocated to Taiwan and about 100 others are considering moving there.
Generous venture capitalists, an inexpensive but highly educated workforce and investors who seem willing to buy stock in relatively unproven technology companies have forced many Silicon Valley firms to consider moving to the Asian island.
“Some companies here raise only $10 million before going IPO,” Wallace Kou, who relocated his 4-year-old digital multimedia company to Taiwan in 2002 and is preparing for a 2004 IPO, told the San Jose Mercury News. “How many companies in the United States can say they can go IPO after raising less than $10 million?”
The trend seems to reverse the decades-long flow of workers and companies from Taiwan to Silicon Valley, long considered the epicenter of the global technology industry. The souring of the U.S. technology sector has pushed at least 200 Silicon Valley companies to Taiwan in the last two years, estimated Ching-Yen Tsay, who oversees a Taiwanese ministry of science and technology.
“There has never been anything like this,” said Li-Chung Lee, president of the Industrial Technology Research Institute in San Jose. The institute is a branch of an organization created by Taiwan’s government to nurture new tech firms.
It’s unclear whether the emigration could result in a long-term brain drain for Silicon Valley. Many investors say demand for Silicon Valley IPOs will heat up when the U.S. economy improves and companies should not rush to Taiwan during the cyclical slump.
James Sha, a venture capitalist with investments in California and Asia, believes a Silicon Valley headquarters still carries more pizazz than one in Taiwan. “Going IPO in Silicon Valley attracts more admiration than it does in Taiwan,” Sha said.
