First International Computer, Inc. Business Information, Profile, and History

Company Perspectives:

First International Computer, Inc. was formed by Dr. Ming J. Chien in 1980 and has enjoyed considerable success year after year. FIC is now a dominant force in the technology market both in research and development and manufacturing fields. As Computer, Communication and Consumer Electronics (3C) markets have converged, FIC has adapted and developed to become a respected producer of 3C related products. Many new and innovative products have joined the FIC range and the company is no longer simply known for its award winning range of motherboards. Now firmly established at the top of the 3C market, FIC is determined to continue achieving excellence in the field of engineering and manufacturing services.

History of First International Computer, Inc.

Taiwan-based First International Computer, Inc. (FIC) is one of the world's leading suppliers of motherboards and other computer peripherals, as well as integrated desktop computers, notebook computers, and handheld and tablet personal computers. Motherboards remain one of the company's most important business segments, with shipments of nearly five million motherboards each year. The maturity of that market, however, has led FIC to tap into new markets for growth, such as a new line of graphic cards in 2003. The company's original equipment manufacturer (OEM) operations construct desktop and notebook computers for many of the world's top brands, including Hewlett Packard, Compaq, NEC, Packard Bell, Dell and IBM. The company is one of the top five Taiwanese notebook makers, with shipments expected to top 1.8 million units in 2003. Yet, with the shift in the notebook market to low-priced, low-margin products, FIC has begun repositioning itself as maker of "3C" (Computer, Communication, and Consumer Electronics) products, specifically with a push into the growing handheld and tablet personal computer (PC) markets, and a complementary investment into wireless technology. FIC, which posted sales of $2.7 billion in 2002, has manufacturing and assembly operations in Taiwan, mainland China, the United States, Mexico, the Czech Republic, and the Netherlands. The company is listed on the Taiwanese Stock Exchange and is linked to Taiwan's industrial powerhouse Formosa Plastics Group through cofounder Charlene Wang. Her husband, Ming Chien, remains company chairman, seconded by CEO Horace Tsiang.

Taiwanese High-Tech Pioneer in the 1980s

Founded in 1980 by the husband and wife team of Ming Chien and Charlene Wang, First International Computer brought together two opposite sides of Taiwan's political and economic history. Chien's father, Ji Chien, had been a poor farmer in pre-war Taiwan who had become a political figure protesting the industrialization policies of the new Nationalist government that had fled to Taiwan from the communist mainland. Ji Chien was thrown in jail and later executed. Ming Chien, who never knew his father, went on to study at the University of California at Berkeley, ultimately receiving a Ph.D. in electrical engineering in 1975 and marrying classmate and fellow Taiwanese Charlene Wang.

Wang's background could not have been more different from Chien's. Wang was the daughter of Wang Yung-ching, chairman of the Formosa group, who became the country's leading industrialist and one of the wealthiest people in the world--in part through support from the Nationalist government, which held Wang, who had been born into poverty himself, as an example of Taiwanese industrial and economic prowess. Yet the famously frugal Wang insisted that his children live frugally as well. As daughter Cher Wang, who became chairman of dominant Taiwanese semiconductor company VIA Technologies, told Business Week: "My father felt we should know the value of everyday life and how to live independently."

Like many Taiwanese in the Cold War era, Charlene came to the United States to study in the 1970s, earning a master's degree in statistics in 1973. Following their marriage, Wang and Chien went to work for Rockwell International and Bell Labs, respectively, in order to gain first-hand international work experience before returning to Taiwan in the late 1970s.

Taiwan by then had started to make its historic transition from an economy based on low-cost manufacturing and subsistence farming into one of the world's most vibrant high technology-driven economies. Wang and Chien were to play an important part in that transition. In 1980, the couple put up their savings to establish their own business, called First International Computer. The company initially acted as a Taiwanese sales agent for international micro computer mainframe computer manufacturers. FIC quickly established itself as a major player in that market, in part because the couple's international experience helped it in its negotiations with foreign business. Yet the strength of the Formosa group, which became a major customer, also played a role, despite Wang and Chien's insistence on building their company without help from Wang's father.

Indeed, a factor in Wang and Chien's choice of business lay in the fact that electronics was an area that the elder Wang had refused to enter. As Charlene Wang told Business Times: "The safest thing was to go into something he knew nothing about." As it began to expand, notably into computer manufacturing, in the early 1980s, the company went to Taiwan's banks, rather than to Wang Yung-ching. Nonetheless, the willingness of banks to lend to the young company was encouraged by its relationship to Formosa.

In 1983, FIC launched its own computer brand, Leo, and by 1986 had established its own computer assembly and sales unit, Leo Systems Inc. FIC quickly recognized the potential of the nascent personal computer market, and especially the importance of one of the new computer design's primary components, the motherboard, which provided housing for the processor and other chipsets and connectivity to a computer's other components. FIC recognized that Taiwan's relatively low labor costs, a large pool of well-trained computer engineers and designers, coupled with the company's access to Formosa Group's plastics and other materials, would give it an edge in gaining a major share of the worldwide motherboard market.

Motherboard Leader in the 1990s

FIC launched motherboard production in 1987. The company continued operating as an assembler for third-party PCs as well, building a new large-scale factory in Hsien-Tien, Taiwan. This new capacity enabled the company begin distributing internationally, and for a time the Leo brand became one of Asia's top computer brand.

In 1989, the company launched its first Intel-based motherboard, gaining an early spot in a market set to explode in the 1990s. The company's fast-growing manufacturing capacity, as well as its circuit board supply relationship with Formosa's Nan Ya Plastics unit, placed it in a strong position as the PC market underwent its first price war at the beginning of the new decade. PC manufacturers suddenly shifted component sourcing to the Far East, especially Taiwan, which quickly established itself as one of the world's centers for a number of primary computer components--including motherboards.

At the beginning of the 1990s, Taiwan boasted more than 400 motherboard manufacturers. Yet FIC's superior manufacturing capacity, and its access to capital funding, enabled it to fight off the competition. In 1991, after going public on the Taiwan Stock Exchange, the company opened a new factory in Linkou, Taiwan, dedicated to motherboard production, boosting its total capacity to some 2.4 million units per year. By then, the company had set up subsidiaries in the United States and Europe in order to bring the company closer to its important U.S. and European computer clients.

FIC, which had been selling computers based on third-party designs, launched its first in-house PC computer system in 1990. In 1992, FIC set up a new production plant in Linou and established a new business unit, the Portable Computing Group, as it entered production of notebook computers as well.

By 1993, fewer than 30 motherboard manufacturers remained, and FIC itself claimed the worldwide number one position. The company's notebook production was also building steam and by the end of 1994 approached a production capacity of 10,000 per month. That year, the company opened a European configuration center in the Netherlands. At this time, the company's sales had swelled to $600 million.

FIC began to migrate its production to mainland China in the mid-1990s in order to take advantage of that market's lower wages. The company was joined by other members of the growing Wang family of high-tech companies, which included California's Everex Systems, acquired in 1993 and led by Cher Wang, and Nan Ya, led by Winston Wang, which had expanded into production of various computer components, including LCD screens. Meanwhile, FIC expanded its own production range in 1995, opening a factory in Pingzhen, Taiwan, in order to produce monitors and scanners, as well as notebook and desktop computer systems.

3C Champion for the New Century

FIC established a new factory and configuration center in Austin, Texas, in 1996. That subsidiary soon expanded, opening a second production plant in Mexico. In the meantime, FIC recognized the growth of a new type of computer user, one more willing to build their own systems and exchange components in their existing systems. To reach this new consumer market, FIC launched its own line of FIC-branded motherboards in 1996.

As the company continued to transfer its main production from Taiwan to the Chinese mainland, FIC also expanded its overseas facilities elsewhere. At the end of 1997, the company began construction of a $100 million assembly and configuration facility in the Czech Republic that was capable of produc- ing 50,000 computers per month. Production began at the Czech plant in 1998. That same year, FIC expanded again, setting up a production and configuration plant in Brazil in order to be closer to the growing South American market.

FIC's early entry in the notebook computer market gave it a strong position as that market began to take off at the end of the 1990s. As configurations approached the power of desktop computers, and prices began to fall, notebooks computers became one of the fastest-growing--and highest-margin--computer segments. FIC's own production grew strongly, particularly after it gained OEM contracts with such major PC brands as Hewlett Packard, Compaq, and, in 1998, Japan's NEC, which helped the company to double its notebook production that year to more than 350,000 units.

By the beginning of the 2000s, FIC's notebook production had topped 1.2 billion computers per year, helping it crack into the top five of Taiwan's notebook computer makers, and had come to account for a major portion of the company's more than $2 million in revenues. Yet FIC had already begun to prepare for the post-notebook market. In 1999, the company opened a new, large-scale production facility the Guanzhou free trade zone in mainland China.

The new facility was targeted at what the company called the "3C" market--for Computer, Communication, and Consumer Electronics. FIC now began developing a new generation of portable computing products, including personal digital assistants (PDAs) and, especially, a new breed of computer, launched in 2001 and backed by Microsoft, called the Tablet PC. FIC also began developing its own wireless technologies, another market set to boom in the new decade.

FIC's transition to the Chinese mainland appeared to be reaching its logical conclusion at the end of 2002, when the company announced that it was establishing its new manufacturing headquarters on the mainland, while moving its corporate home, as well as the base for its research and development operations, to new quarters in Taipei. Nonetheless, for many industry observers, the move of these operations as well to the mainland appeared inevitable.

In the meantime, FIC continued to enjoy rising sales of its core motherboard, desktop, and notebook PC lines. The latter range was boosted in 2003 with a cooperation agreement to launch a new line of notebooks based around the wireless-capable Centrino processor from Intel into mainland China. The company also entered the computer peripherals market that year, launching its own line of graphics cards based on ATI components.

At the same time, FIC continued to pursue its 3C strategy. In June 2003, the company prepared to unveil what it considered to be the next generation in personal computing, the so-called Digital Home PC, developed jointly with Intel and Microsoft. The new system, which incorporated wireless technology into a computer design midway between a desktop and notebook configuration, had already achieved strong pre-orders from computer manufacturers as the company prepared an initial launch in Japan for October 2003. FIC now prepared to lead the computer market into its vision of a 3C future.

Principal Subsidiaries: First International Computer of America, Inc.; FIC Sales Corp. (Japan); FIC Europe; FIC Brazil.

Principal Competitors: Quanta Computer Inc.; Acer Inc.; Asustek Computer Inc.; Compal Electronics Inc.; Tatung Co.; Lite-On Technology Corp.; Synnex Technology International; VIA Technologies Inc.; Elite Group Computer Systems Company Ltd.; Gigabyte Technology Company Ltd.

Chronology

• Key Dates:
• 1980: Charlene Wang and Ming Chien found company as a sales agent for main frame and micro computers.
• 1983: The company begins assembling its first PC computer systems under the Leo brand.
• 1987: The company enters motherboard manufacturing with large-scale production facility in Hsien-Tien.
• 1989: First International begins assembling PCs with Intel processors.
• 1991: U.S. and European subsidiaries are opened and production of the first in-house personal computer design begins.
• 1994: A configuration plant is opened in the Netherlands.
• 1996: A manufacturing and configuration plant is opened in Austin, Texas.
• 1997: A plant is opened in the Czech Republic.
• 1998: A plant is opened in Brazil.
• 1999: A large scale production facility is opened in Guanzhou, in mainland China.
• 2002: A new manufacturing headquarters is set up in China.
• 2003: A new generation Digital Home personal computer is launched.