Takisawa Technology (6609), a leading lathe manufacturer, initiated a generational transition last year with "Millennial" Lin Zhen-Yong (pictured) taking over as General Manager. Like his predecessor Dai Yun-Jin, Lin shares a background in research and development. Faced with tariff wars, industrial structural shifts, and the sweeping wave of AI, Taiwan's machine tool industry stands at a critical crossroads. Takisawa is striving to carve out its own path by utilizing granular data analysis to better understand different markets and customer segments, identifying sales highlights amidst economic fluctuations, trying to push production planning one step further, and expanding sales technology personnel to transition from selling machinery to providing custom part-machining solutions to win new order opportunities.

Lin stated that the Taiwan plant is currently vying for orders for December and January next year. The company has benefited from the AI server boom, securing tangible results in precision component machining, and has begun trial-manufacturing robotics parts. Since it is impossible to predict exactly when the robotics sector will experience explosive growth, early preparation is essential.

Hit by the double whammy of tariff wars and drastic exchange rate fluctuations last year, Takisawa suffered its first financial loss since the global financial crisis. Lin expressed that the current priority is to normalize operations and restore profitability. Despite last year's deficit, the company has implemented salary raises for two consecutive years, primarily to counter the intense talent demand from the electronics sector, ensure the stability of the current workforce, and quickly return to profitability so employee compensation and welfare can be further enhanced.

Lin pointed out that last year the New Taiwan Dollar exchange rate bottomed out at 28 USD/TWD, representing a 17% gap compared to the 33 USD/TWD level at the beginning of last year. Recently, the currency has moved to around 32.2 to 32.3 USD/TWD, which is about a 16% difference from last year's low. Such intense price volatility means the company must adjust its internal health as much as possible to cope with external environmental fluctuations and economic downturns.

However, economic downturns expose the areas where a company needs improvement. Over the past year or two, Takisawa has executed various corrective measures, transforming the entire sales cycle across sales, production, and after-sales service. Managing the friction caused by these changes has been the most challenging part.

Furthermore, the sudden economic rebound has created new bottlenecks, including shortages of controllers and key components, and client demands for short delivery lead times or available stock. Combined with the sudden influx of orders, manpower shortages have also become an issue.

Reflecting on his tenure of over a year as General Manager, Lin shared that while his previous role in R&D focused solely on building a great product, he must now also figure out how to sell it, striking a perfect balance between quality, price, performance, and delivery timeline.

Lin pointed out that the industry today is radically different from the past. Previously, buying a machine was like buying a car—you expected it to accompany you for 10 to 20 years. Today, in many sectors, purchasing equipment is akin to buying a smartphone; if it can generate profits for 3 to 5 years, that is enough. Clients want to recoup costs quickly, meaning specs do not need to be top-tier, which makes market price competition exceptionally fierce.

Citing Japanese competitors in the Chinese market as an example, Takisawa historically held a 20% price advantage over Japanese manufacturers. Yet, over the past few years, they discovered that Japanese prices had dropped below theirs, even as material costs continued to climb. This came as a massive shock. It is primarily because Japanese manufacturers possess larger production volumes, allowing them to cover fixed costs with high-volume, affordable baseline products, while leveraging brand prestige to maintain profitability through high-end machinery. Additionally, Japanese firms face fewer competitors in certain client accounts, enabling them to command better prices—a challenge that Taiwanese manufacturers now widely confront.

Japanese firms leverage massive machine inventories and planned production to drive down costs. Lin noted that while machine tools still require planned production, Takisawa's current approach involves utilizing analytical tools to meticulously dissect sales history, client demographics, and regional market preferences. This allows them to discuss future trends with distributors earlier, determine which types of machine tools to market, push production planning slightly forward, and uncover sales blind spots through granular analysis.

Lin shared that distinct product demands emerge within economic cycles. During economic downturns, demand for large-scale equipment tends to rise because governments stimulate the economy through public infrastructure projects, creating a corresponding need for heavy machinery. Conversely, during economic upturns, expansion in electronic components and automotive parts usually drives the market, making compact machining equipment much more sought after.

Returning to the economic shifts in the machine tool industry this year, Lin admitted he does not anticipate the market returning to the frantic cycles of the past. Nevertheless, the AI server sector has been exceptionally strong over the past year or two. While the primary end-processing market is located in China—making Chinese machine tool firms the main beneficiaries—Takisawa has fortunately captured some AI dividends. Business has been improving gradually since January. Takisawa also gained a head start in researching machining methods for AI server components, building a solid track record in areas like semiconductors and AI server cooling plates. It is now trial-producing robotics components, which represent high-potential development fields where lathe machining is widely applied.

Beyond the shifting industrial applications, another strategic direction is expanding sales technology personnel. Lin explained that in the past, Taiwan was distant from end-processing markets and accustomed to a simple machine-selling model. Today, however, clients expect you to take a component and quickly present a machining plan along with a cycle time calculation. They need rapid, specialized component machining solutions so they can evaluate whether the output efficiency matches the machine's price tag. Through this consultative approach, Takisawa has successfully secured several new orders.

Lin noted that these capabilities require time to cultivate, as the team must perform trial machining for clients. The advantage, however, is that once a complete solution is developed, it can be replicated for other clients. In recent years, Takisawa has continuously built its reputation in precision machining for automation components and AI servers. The Taiwan plant is already actively working to secure orders for the end of this year and early next year.