As demand for technology accelerates and shifts rapidly with changing lifestyles, technology companies need to be innovation-driven and embrace change to stay ahead of the pack.
"The market is changing. Technology is changing and people's tastes are changing. You need to not only follow the trend, but also detect the trend beforehand," says Yancey Hai, the chairman of Delta Electronics Inc.
Established in 1971, the Taiwanese company was once highly reliant on TV component manufacturing. When founder Bruce Cheng foresaw the personal computer (PC) trend coming, the company started gradually shifting its focus to power supply components for PCs. The shifts have been continuing, to components for portable devices and to being a solution provider ready to respond in areas beyond conventional information technology.
"If we still stick to the old business, Delta is not going to be in this world anymore. Now that the PC is declining, we need to find something else," Mr Hai told Asia Focus in a recent interview in Bangkok.
The latest frontier for the company is biomedical technology, for which Mr Hai sees high demand as the global population ages. For example, the company's researchers are working on a new type of glucose meter, a blood sugar testing device, to eliminate the need for manual information processing.
"It's equipped with a wireless transmitter and the result will be automatically recorded, and then sent to a doctor's office via WiFi or Bluetooth. If there is certain abnormal level, a warning sign will flag," said Mr Hai.
"Under our corporate R&D programme, we have a group of people who are looking at more advanced medical equipment like a cancer detector. But it is definitely going to be a long-term project; you are not going to see the result within five years."
Mr Hai acknowledges that some people don't see the link between a company such as Delta and the world of medical devices, but he says there are precedents in areas such as the development of the heart pacemaker.
"Today when I tell our partners that we're going to get into the biomedical field, some of them say, 'Delta, you're in the electronics business.' But then again, if the business is good for the customers, then it's going to be good for us and in the end it's going to become one successful business," he said.
The proof is in the financial results. Last year Taipei-listed Delta earned a net profit of US$664.8 million, an increase of 16.2% from the previous year, on sales of $6.12 billion, up 7.7% from 2013. Its Bangkok-listed affiliate Delta Electronics Plc has also seen a steady improvement in its operating and net profits as well as its ratio of net profit to sales over the past three years. Last year its net profit rose 10.1% to 5.96 billion baht and sales were up 7.1% to 44.1 billion baht.
Delta invests between 5% and 6% of the group's annual sales revenue in R&D and has R&D facilities in Taiwan, China, Thailand, Japan, the United States and Europe. In 2013, it had 7,500 R&D engineers and 54 R&D sites throughout the world.
"We believe in spending money on R&D. Even during the financial crisis in 2008-09, we did not reduce our R&D expenditure," said Mr Hai. "Business needs to change to survive."
He brought up the example of Kodak, a company whose name was synonymous with photographic film products for decades. But it failed to see the digital photography revolution coming and had nothing to offer the market as demand for film declined.
SOCIALLY RESPONSIBLE
For Delta, adding more value to its products and for its customers by promoting energy efficiency and cost saving is the cornerstone of corporate social responsibility (CSR).
"The business proposition has to be mutually beneficial for the business model to work. If it is only good for us, and not good for the customers, the business model will not work," said Mr Hai.
As part of its sustainability drive, Delta is aiming for a 30% increase in energy-saving in all of its operations including manufacturing. From 2010 to 2013, Delta's technology saved 11.9 billion kilowatt/hours of electricity, equivalent to the reduction of 6.4 million tons of carbon emissions.
The "green data centre" is one example of a project that adds value through energy saving while also allowing Delta to benefit from huge market demand as more devices become connected to the internet, from tablets and smartphones to wearable devices such as Fitbit, Apple Watch and Google Glass.
"Once you have more mobile devices, everybody has to go through a data centre. This is why we have put a lot of concentration in this business," said Mr Hai.
He sees the market for devices with internet access at least doubling in the next few years as mobile phones and tablets become ubiquitous. Then there is the "internet of things", which takes in everything from household appliances to public utilities. For example, an electric vehicle charger with smart capabilities can connect to a utility company, determine when electricity is cheaper and automatically recharge a vehicle.
Instead of individual storage, cloud storage has been increasing in popularity with the emergence of applications such as Google Drive, Dropbox and iCloud, not to mention the storage needs of social networks such as Facebook and Instagram.
With internet traffic increasing by 30-40% a year, data centres have become a crucial element of the internet era, a fact that Delta recognised early. It started out by providing components such as switches, cooling devices and uninterruptible power supply (UPS) units, but now it has integrated all of its component departments to provide a data centre solution business, which is simply to provide a finished product.
"The value we bring to our customers is an energy-saving data centre — we call it a green data centre — so they are going to save a lot of money because the cost could be almost cut in half," said Mr Hai.
SMART MANUFACTURING
Finding better solutions through R&D to help its customers run cost-efficient businesses is certainly a challenge, especially when Delta itself must deal with cost issues on a large scale. With more than 60,000 employees worldwide, the group needs to be aware of issues ranging from rising wages in China to the ageing population in Thailand.
"Labor is a challenge and we have prepared to deal with that. We already automate part of our production," Mr Hai said. "Automation is going to be a solution."
Delta now has two automation departments, one that develops equipment for Delta alone, and an industrial automation department offering standard equipment to outside customers.
"We think that manufacturing in the future must be 'smart manufacturing', which is a combination of robots together with human beings," said Mr Hai. "One robot can replace a lot of human beings, so even if a labour shortage is a problem but it's not unsolvable."
Machine-intensive manufacturing, he said, could improve not only productivity but also product quality. Inspection of PC boards, for instance, is a very tiring job because there are thousands of components and fatigued human eyes could overlook flaws. But optical inspection technology offers a more accurate result because a machine is equivalent to four or five people — and it never gets tired.
Still, machines can't do everything. As more industries strive toward value-added production, more workers with specialised expertise such as engineering will be needed.
"The bottleneck you encounter when you automate an operation is that you have to have very good engineers," said Mr Hai. "The machine, though it never gets tired, can break down, so you need to fix it.
"We are training people, but we have to start early. We cannot train them after they join us but before, when they are in school. We have a plan to coordinate more closely with good universities which provide studies in mechanical engineering, automation, power and electronics."