An Empirical Study of the Operating Performance of IC Design Industry in Taiwan
Date Issued
2015
Date
2015
Author(s)
Tsai, Po-Chuan
Abstract
Taiwan''s IC design industry has achieved success for recent 30 years. Therefore, the factors which impact IC design industry''s operating performance are worth to discuss. Most of the related papers focus on financial ratio to analyze operating performance. However, the IC design industry''s operating performance may be affected by macroeconomic factors. It''s not appropriate to analyze operating performance only with financial ratio. So, this paper would choose financial factors, macroeconomics factors and government policies as explanatory variables to analyze IC design industry''s operating performance. The financial factors include assets, receivable turnover, inventory turnover, fixed asset turnover, research & development expense. The macroeconomics factors and government policies include exchange rate of USD to NTD, export orders for electronic items, b/b ratio, weighted stock index-electron, government spending, monetary aggregate. We use pre-tax income to evaluate operating performance. This paper focuses on 6 IC design companies listed on Taiwan Stock Exchange, including MediaTek, Novatek, Sonix, Holtek, Richtek and Sitronix, and uses quarterly report of these companies for 2004 to 2012. The financial crisis broke out in 2008, we will analyze the difference between 2004Q1 to 2008Q3 and 2008Q4 to 2012Q4. By empirical results, all explanatory variables have obvious positive effect on 2004 to 2012 model. Considering financial factors, macroeconomics factors and government policies as explanatory variables, which has higher explanatory power. Considering the model 2004Q1 to 2008Q3 and 2008Q4 to 2012Q4, empirical results show model 2004Q1 to 2008Q3 and 2008Q4 to 2012Q4 have higher explanatory power than model 2004 to 2012. Before financial crisis, financial factors significantly affected pre-tax income. However, macroeconomics factors and government policies significantly affected pre-tax income after financial crisis. The lag term of b/b ratio, which have positive effect to pre-tax income. It shows that the b/b ratio is a leading indicator of Taiwan''s IC design industry. But the lag term of research & development expense does not have significant influence to pre-tax income.
Subjects
financial ratio
macroeconomics factors
government policies
financial crisis
leading indicator
Type
thesis
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