As is true of most consumer electronics that make life more convenient and socially connected, few ever ask about the unsung heroes and look upstream the supply chain. For example one can wonder how many know the majority of machine tools turning out hot-selling tablet personal computers and smartphones are made in central Taiwan, a manufacturing hub for precision machinery and production base for customized key components for Apple iPhones and Google Inc.’s solar-energy systems.

Eric Y.T. Chuo, chairman of Hiwin Technologies Group and Taiwan Machine Tool & Accessory Builders’ Association (TMBA), recently reminded bystanders of the significant role played by machine tool and parts makers in central Taiwan.

Approximately 90% of Taiwan’s 1,400-odd manufacturers of machine tools are located in the greater Taichung area, capable of rolling out NT$250 billon (about US$825 million) of precision machines per year, including large CNC (computerized numerically controlled) lathes and drills for iPhones. The area’s complete, sound cluster of suppliers, known for customized capacities and reasonable prices, makes Taiwan an ideal place for contract manufacturing key components for consumer electronics.

Headquartered in the Taichung Industrial Park, central Taiwan, Hiwin Group specializes in production of ball screws and linear guideways for precision machinery, and is currently the world’s third-largest manufacturer of such items, with Chuo confident of taking the No.2 position by 2012 and even the lead by 2015. The group supplies key machine tool parts used to produce iPhones and coffeemakers for Starbucks.

Integrated Production

Hiwin has a pulse on the global economic climate due to having customers from wide-ranging industries and regions. Chuo notes Taiwan’s machine-tool industry has integrated production to help it weather the economic slowdown to regain momentum in the second quarter of 2012, when customers complete inventory adjustment. After experiencing high growth in sales for a few quarters, Taiwan’s machine-tool industry expects decline in orders in the fourth quarter of this year.

Chuo asserts that Taiwan’s machine-tool industry, after inventory adjustment and diverted orders from Japan, will stabilize in the second quarter of next year due to a complete, sound supply chain, forecasting the domestic machine-tool industry to see small growth in both production and export values in 2012.

A survey by the TMBA shows the overall production value for Taiwan’s machine-tool industry this year will grow 20% from last year, despite a decline in production value in the fourth quarter relative to the preceding one, with the TMBA predicting slowing growth of between 5% and 10% in production value in 2012 due to declining demand.

But Chuo believes Taiwan’s machine-tool industry will see continued export growth in 2012 due to demand from China, Japan and South Korea.

Advantages

Despite the uncertain global economy, Hiwin has advantages against competitors to achieve continual growth. Hiwin offers products for many industries, has solid cooperation with world-renowned manufacturers, and supplies products mostly for automation. Also the maker has global sales agents, including in Italy, France, and China, with major export outlets including Germany, the U.S., France, Italy, China, Japan, South Korea, India, Switzerland, Turkey, Brazil, and Czech Republic.

Chuo says Taiwan is capable of rolling out machine tools to produce key components used in consumer electronics as tablet personal computers and smartphones.

R&D Investment

Eestablished in October 1989 and capitalized at NT$2.346 billion, Hiwin has set up R&D centers in Taichung City of central Taiwan, Tokyo, Moscow, Offenburg, Germany, and Israel, currently spending 4% to 5% of total sales in R&D per year.

Adhering to professionalism, conscientiousness and accountability enables Hiwin to produce high-quality items for customers worldwide, as well as becoming since 1992 certified to ISO9001, ISO14001, and OHSAS18001 standards. The company aims to integrate global resources for continuous innovation.

Being in partnerships with leading European makers of pneumatic devices and machine tools has enabled Hiwin to minimize operating risks amid the slowdown in the machine-tool industry. The company says the slowdown will not impact sales significantly as the sector accounts for only 20% of total sales, thanks to effective market diversification over the past several years.

Major European Buyers

Hiwin claims to be a major supplier for Europe’s leading manufactures, including FESTO, Europe’s No.1 manufacturer of pneumatic devices; DMG, Europe’s largest manufacturer of machine tools; and Heller, Germany’s largest manufacturer of double-column machining centers. These three European firms have. Hiwin sealed the contracts with the three leading manufacturers, whose annual sales exceed NT$100 billion, at the 2011 EMO Hannover, held Sept. 19-24 in Hannover, through its German subsidiary.

Chuo notes FESTO mainly procured key components from Japan in the past. With 13 years of effort, Hiwin has become one of FESTO’s two major suppliers, to develop and roll out specialized linear guideways that will be shipped sometime in the second half of 2012. In addition, Hiwin will begin supplying custom ball screws and linear guideways to DMG and Heller in the second half of 2012.

Starting from the second quarter of next year, Hiwin will begin supplying 100,000 ballscrews and 25,000 actuators for sunlight-tracking system to customers from the solar-energy sector, with such additional sales to help maintain double-digit annual growth in 2012 sales, albeit slower than this year’s.

To meet influx of orders from Europe, Hiwin is stepping up production expansion in Taiwan. For instance, the company has procured land to set up a new factory in Dapumei, Chiayi County, southern Taiwan; while construction of the operating headquarters and a factory in the Taichung Precision Machinery Park will be completed in the foreseeable future. Sometime in October this year, the company expects to be approved to build a third plant of 51,840 sq.m. in the Yunlin Technology Park, southern Taiwan.

Four Product Categories

Hiwin offers four product categories of precision machinery components (ballscrew, linear guideway, linear bearing, and linear stage module); sub-system unit and system unit (linear stage-K/KA/KA type, X-Y positioning platform, and linear motion positioning system); aircraft parts (ballscrews for missile actuator, aviation flap actuator, missile launcher support components, and engine cooling plates); and electro-mechanical products (linear motors, linear actuators, gantry system, and controllers). The company says its RG-series, high-rigidity roller-type linear guideways are one of its latest precision linear motion components to meet global demand, ideal for machine tools, automation equipment, semiconductor and optoelectronics.

Its Super S-series balls crews feature low noise, compactness, high speed, with Dm-N value reaching 220,000, and are suitable for CNC machinery, precision machine tools, industrial machinery, production equipment for electronics, and high-speed machinery.