Country Report November 12, 2009, 5:00PM EST

Taiwan's New Tech Dreams

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Still, as last year proved, things can turn south quickly, something many Taiwanese tech companies fully understand. So Acer, which last summer passed Dell to become the world's No. 2 PC company (behind Hewlett-Packard (HPQ)), is moving into products such as smartphones and other mobile devices. Vizio, produced by Amtran Technology—a 15-year-old company that got its start making PC monitors—is now a top-selling brand of flat-screen TVs in the U.S. And notebook maker Quanta Computer is mulling production of devices such as cameras, gaming machines, and medical sensors. "Quanta will become a brand new company from now on," vows Chairman Barry Lam.

Taiwanese companies seeking to diversify might want to follow Simon Lin's lead. He is CEO of Wistron, the manufacturing arm of Acer that was spun off in 2002 when Acer decided there was no glory in being a contract manufacturer. Wistron still shares with Acer a drab office tower in the low-rent Taipei suburb of Hsichih. The neighborhood is no match for Hsinchu, the giant tech park where TSMC has its digs, but it fits with Wistron's low-key, low-cost image. The company, which had revenue of $13.5 billion last year, has already expanded far beyond PCs, making TVs and BlackBerry smartphones.

More ambitious diversification is coming soon. Lin, fresh from a Taipei meeting with Microsoft (MSFT) CEO Steve Ballmer, says the devices Wistron makes in the years ahead will have to connect to the Internet but won't necessarily be computers. Lin also wants Wistron to develop businesses such as equipment repair and recycling, which is sure to pick up as more governments mandate clean disposal of old tech gear. To that end, Wistron in October invested $8 million in a company that recycles computer motherboards. Within a few years, Lin predicts, Wistron could have a $1 billion business in tech recycling. "No one has a crystal ball to say how long [the PC business] will last," he says. "But we are not sitting here just waiting for the sunset of the PC industry."

While PCs may rebound next year as the economy picks up and companies upgrade to Windows 7, they will surely be a smaller part of the tech mix as the market shifts. And the island's electronics makers will thrive in that post-PC era, says Jen-Hsun Huang, CEO of chipmaker Nvidia, who grew up in Taiwan before moving to the U.S. "If every cell phone in the world becomes a mobile computer, if every TV becomes a connected TV," he says, "holy cow!"

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Warming Trend

While Beijing has long welcomed Taiwanese investment in many industries, Taipei did not reciprocate until this year. Since new regulations took effect on June 30, Taiwan's economics ministry has tallied $5.9 million worth of Chinese direct investment, Taiwan's Central News Agency reports. And that trickle may build to a steady flow if Taipei broadens the list of areas, including parts of tech, in which Chinese companies are welcome to invest.

To learn more about cross-straits investment, go to http://bx.businessweek.com/china-business/reference/

Einhorn is Asia regional editor in BusinessWeek's Hong Kong bureau.