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Taiwan’s TXC serves as “pulse” of smartphones

In April, Taiwan’s TXC overtook Japan’s KDS as the third largest quartz crystal component maker in the world, only behind Seiko Epson and NDK. The five top suppliers of quartz crystal components are all Japanese except TXC, Commonwealth monthly reported. TXC’s customers include all the top brands, such as Apple (US), Samsung (South Korea), HTC (Taiwan) and Huawei (China). Strongly competitive, each of the five global players in the seven billion smartphone market uses quartz crystal components from TXC.

Quartz crystals are key components in frequency generation and control devices for signal timing in smartphones. In simpler term, if one were to consider the chip to be a smartphone’s heart, then the quartz crystal component would be the delivery system, which supplies blood to every part of the body.

For a long time, the Japanese dominated with 80 percent of the global market, but by dedicating more resources to R&D and being increasingly competitive, TXC made its way into third place. In 2012, TXC’s combined revenues reached a record high level of NT$10.93 billion (US$364.33 million) with a 10.4 percent growth rate, and continuing its eight years of double digit profits.

In a field where engineers and PhDs litter high-tech companies, Lin Wan-xin, TXC’s president is a rarity. With only a high school education, he built his professional knowledge from the bottom up and broke through Japan’s dominance in this high-tech sector, leaving competitors from Taiwan, Korea and China far behind.

Around the year 2000, the global notebook computer market enjoyed exponential growth, noted Commonwealth. This caused delays from Japanese suppliers of quartz crystal components. Big European and American companies, like Intel and Seagate, sought to diversify their supply sources and TXC was lucky to become one of the suppliers of global notebooks.

In 2005, smaller and more advanced telecom products like smartphones started to proliferate. And TXC entered the supply chain of brand names like Motorola and Nokia. About that time, Apple also started to make iPods. TXC got a chance to present its product at Apple’s headquarters, but was rejected because of the low product quality. Lin was not deterred. He sent his R&D engineers to study quality control and successfully resubmitted his product just in time to become part of Apple’s supply chain.

According to Commonwealth, with more and more customers, TXC expanded its R&D team five times (to 300 engineers) in 10 years, accounting for 20 percent of the workforce at its Pinzheng factory in Taoyuan County (northern Taiwan). His team helped TXC to secure 15 projects a year, averaging one per month.

With abundant innovative energy, TXC made better products, climbing out of the top ten to become No. 3 in the rankings. Lin said, “To keep competiveness, you have to provide better products so that your competitors will not catch up.”

Now TXC accounts for 75 percent of the quartz crystal components of Apple’s mobile devices. Hitching with Apple, TXC climbed to the top. But Apple’s growth has slowed after the death of Steve Jobs, so TXC’s revenues are also down 1 percent compared with last year.

In order to safeguard its future, Lin said, TXC has diversified its customer base. Beside Apple, TXC has added more new companies to its customer list, including Huawei and Zhongxing Telecommunication Equipment Corp., HTC, and Samsung.