Site:

Tatung Company
400 Chen The Rd, 7th Sec., Peitou, Taipei, Taiwan, 112 Tel: 886-2-893-8450-6; Fax: 886-2-893-8451

Participants:

Frank Wu, Deputy General Manager, Computer Plant
Hsing Jia Lin, Technical Department, Computer Plant
Wen Chen Kuo, Technical Department, Computer Plant

Mission and Strategy

• Tatung Company produces a wide range of products, including color TVs, home appliances, and a full range of power generators, transformers, and substations. The VCR plant produces magnetic drums with precision equipment. The audio plant produces a complete line of stereo equipment. Tatung is the largest producer of refrigerators in Taiwan. Its refrigerators are available in all sizes, serve all industries, and are sold around the world. The company builds telecommunications products, including multifunction facsimile machines. The company also supplies compressors to other manufacturers. Tatung's electronic and multifunction rice cookers are famous throughout the world. Tatung also produces washers, dryers, and new supersonic dish washers. The company produces window air conditioners and dehumidifiers. It also provides a full range of office furniture.
• Tatung produces much of the materials, components, and equipment used to manufacture its products, including silicon rods and wafers for semiconductors. The company also does its own circuit design and fine printing. The chemical materials center produces copper clad laminates and insulating varnish. A magnet plant produces high quality magnets as part of the company's vertical manufacturing strategy. The optical storage center produces CD-ROMs. The company is a leading producer of wires, optical fiber, and power cables. Components also include electronic type modulators, magnetic heads, computer keyboard switches, and volume controls.
• The Tatung Institute of Technology has a full range of engineering programs, including mechanical, electrical, chemical, and materials engineering departments that provide undergraduate and master's degrees. Mechanical, electrical, and chemical engineering programs are PhD granting departments. Other programs include business administration and information sciences.
• The company is decentralized into 25 units and 80 profit centers around the world. Total sales were over $4.5 billion in 1995. It has subsidiaries in Thailand to make monitors, in Malaysia to make CRTs, in Indonesia to make motors, in China to make monochrome monitors, in the UK to make monitors and TVs, and three other subsidiaries. It has one of the largest color and monochrome monitor plants in the world.

Key Elements of Presentation

• The Computer Division makes computers, including notebooks, desktops, and advanced workstations. Sales were about $400 million in 1995. About 20% is Tatung brand, of which 35% are notebooks. OEM and ODM are both about 40% of the business, including monitors, PCs, and soundcards. The computer plant includes about 1,150 people. There are about 200 in R&D. It has 270 Philippine workers. There are four production lines: SMT, notebook, moniputer (monitor plus computer in a single box), and desktop. SMT runs three shifts per day, seven days per week. The moniputer line is two shifts per day.
• The Computer Plant produces about 50,000 motherboards per month. The plant has 5 SMT lines using Panasonic equipment and 6 manual insertion lines. SMT lines have two high speed mounters. The follow-on line is for through-hole insertion. About 10% of the components are done by hand insertion. Moniputers use auto insertion equipment. Final assembly lines include 3 PC lines and 4 moniputer lines that produce about 100,000 units per month, one workstation line that produces about 1,000 units per month, and 2 notebook lines that produce 20,000 units per month. The plant obtained ISO 9001 certification in December 1992.

Key Elements of Tour

• Tatung began assembling BGA in 1995 by producing the PowerPC with IBM and Motorola. SMT will be upgraded in the future to include TAB and flip chip. One OEM's notebook uses 352-pin BGA chip sets. Double-sided, four-layer boards were put into production in 1991. Ceramic BGA chips were introduced in 1992.
• SMT operations are enclosed in a cleanroom environment. Visitors walk around the operation rather than entering it. The dual SMT lines begin with solder paste and then go to two high speed Panasonic chip shooters that place 0.4 mm pitch parts on notebook boards. Water soluble flux is used with DI water cleaning. After completing the process for one side, the boards are sent to the second line for the reverse side assembly. If the second line is not available, they can reset the first line and run it through.
• There is 100% in circuit testing. Tatung uses GenRad's 2284 model and does internal software development for tests. After through-hole components are placed, the board is preheated before soldering. Some components can't pass through the wave solder and are placed at the end of the line. After SMT processing, the first pass yield is 95-98%.
• Tatung utilizes Japanese TQM and TPM methods for quality improvement and machine maintenance. Final assembly has each station worker sign off on the task completed as the notebook moves down the line. The LCD is sourced from Toshiba and Hitachi, although a local subsidiary is developing an LCD. One shift produces 600 notebooks per day. Each notebook goes through vibration testing and then burn-in. Dynamic testing for two to three hours is then completed during burn-in using infrared controls. The functional tests are carried out with testing software developed by Tatung. It can take 8 to 10 minutes to complete all the tests. There is 100% QA test at the end of the line to follow a checklist. There are then customized QA tests.

Conclusions

• Motherboards take about 4 to 5 days from order to delivery. It takes 20 days from order to delivery for notebook systems. The actual production time depends on the testing procedures required, and that depends on the configuration and customer requirements.
• Rapid price declines in components are making it difficult to manage profitability. Unlike desktops, notebooks install the CPU and DRAM. In the first quarter of 1996, the DRAM prices dropped quickly. The same happened with LCD prices. Production and inventory scheduling is critical to reduce risks from price decreases.