HSINCHU, Taiwan: Mike Liang earns the equivalent of $37,500 a year, owns a four-bedroom apartment and can afford to send his two daughters to English tutorial schools.

Like other employees at the Hsinchu Science Park, Liang, a marketing manager for a semiconductor company, is the envy of many on this island, where average annual salaries stagnate at around $17,000 and high property prices keep many married couples living with their parents.

But what is on Liangs mind and that of many others in Taiwans high-technology industry is how it can maintain success amid growing competition from neighbors, including China and South Korea, and global price declines in products like laptop computers and flat-panel televisions. The slower growth rate in sales of some high-tech goods and the U.S. economic downturn are also worries.

Many industry workers and analysts say the greatest economic challenge for Taiwan and its 23 million people is overcoming its reliance on manufacturing for other brands and instead focusing on innovation and building its own brands.

“We have to transform ourselves,” Liang said during a lunch break. “Otherwise, our costs will keep going up and companies will move to China and Vietnam.”

High-tech products accounted for 70 percent of the islands 2007 exports. Taiwan is the worlds largest supplier of notebook PCs, motherboards and liquid crystal display panels for flat-screen televisions, according to the government.

Two of the worlds biggest contract microchip makers are Taiwanese - Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. - and their foundries, the worlds two biggest, are based in the science park, one of three on the island. The Hsinchu Science Park was opened in December 1980, Southern Taiwan Science Park in 1996 and the Central Taiwan Science Park in 2003.

The Hsinchu Science Park, which covers 1,373 hectares, or about 3,400 acres, is home to 440 companies and where most of Taiwans top high-tech manufacturers are based.

As a result of the success of the science park, annual household income in Hsinchu City, about 15 minutes by high-speed train from Taipei, is the second highest in Taiwan, after the capital, Taipei. In 2006, it reached 1.17 million Taiwan dollars, or about $38,000, which is 1.28 times higher than the national average and just below Taipeis $1.26 million dollars.

New apartment blocks jut out from what used to be rice fields in the outskirts of Hsinchu. Upscale department stores like Sogo and boutique restaurants and shops dot the streets near the citys riverside.

But profit margins for many of the companies in the park have been narrowing in the past few years. Some have moved production to China while others are considering relocation to Vietnam for lower costs on labor and production.

“Back in 1999 and 2000, these companies enjoyed quite healthy profit margins,” said Ming-Kai Cheng, regional head of technology research for CLSA, a leading Asia research, brokerage and investment group. “Now the number of companies in profit stage has dropped.”

Revenue growth at Taiwanese semiconductor companies, for example, has fallen to single digits from double digits. A main reason is what Cheng calls the “me, too” mentality, or too many Taiwan companies doing the same thing.

“A lot of companies think if youre going to make something profitable, Im going to make the same thing slightly less profitable,” Cheng said.

About 50 percent of the companies in the Hsinchu Science Park carry out semiconductor manufacturing, design or related work, with revenue from the sector comprising 71 percent of the parks total revenue.

Taiwan companies are also largely focused on making products for global brands like Dell, Apple and Intel, instead of coming up with their own brands, and they focus on hardware manufacturing, where only a small percentage of the price the consumer pays for a product is earned.

As little as 5 percent of the consumer price for a product like a laptop can be earned by the Taiwan companies that assemble them, while a higher percentage - around 20 percent - is earned by contract manufacturers, also known as original equipment manufacturers, or OEMs - which make chips or other parts for the brand holders, according to industry estimates.

With their own brands, the companies could earn as much as 30 percent of the consumer value of a product, analysts estimate.

“Its going to be very hard to continue the OEM model,” said a manager of a company that is trying to design a high-quality chip for cellphones, who requested anonymity to protect his companys business strategy.

Apple Inc. CEO Steve Jobs made two strategic moves Monday to embrace the next generation of the Internet, introducing a version of the Safari browser for Microsoft Windows-based computers and encouraging developers to create programs for the iPhone using tools popularized by the Web 2.0 movement.

Jobs made the announcements during his keynote address kicking off this week’s Worldwide Developers Conference in San Francisco. The high-profile executive also showed off several features of Apple’s latest operating system, Leopard, and unveiled Mac versions of popular computer games, including Harry Potter and the Order of the Phoenix, and Need for Speed.

Monday’s announcements show that Apple and its Mac platform are becoming more mainstream, using dominance in digital media to attempt to become a much larger presence in consumer technology.

“There’s no question that Apple has captured the interest and attention of PC users,” said Tim Bajarin, principal analyst for Creative Strategies.

In an effort to expand its Internet presence, Apple will pit its Web browser, Safari, against Microsoft’s Internet Explorer and Mozilla’s Firefox. Safari has less than 5 percent of the market while Internet Explorer has 78 percent, Jobs said. But that could change now that people can download Safari for PCs that run Windows.

“Maybe we can grow our Safari market share in the future,” Jobs said. “We’re going to try.”

With the highly anticipated iPhone scheduled to hit the market June 29, Jobs stopped just short of opening up its platform to outside developers, a move that many at the conference had hoped to see. But he did offer a compromise that could spark the creation of hundreds of programs ranging from games to productivity applications for the iPhone.

In a nod to Web 2.0, Jobs said that developers will be able to design applications for the iPhone through the Internet. Just as people can view photos and videos through Web sites such as Flickr and YouTube, they will be able to access such programs on the iPhone. That’s possible because the iPhone will run a full version of Safari, rather than a modified Web browser as most cell phones do.

Although the decision disappointed many developers, it acknowledged the trend of Web-based programs.

“It’s an indication Apple is going in the same direction as Web 2.0,” said Thejo Krishna, a senior technical architect for Effigent, a San Jose software company, who was attending the conference at Moscone West. “You have a large community base already writing for Web 2.0.”

The move could free developers from creating multiple versions of the same program for different cell phone models in the future. It also ensures that, if something goes wrong with a program, the cell phone and network won’t go down, too, said Chris Messina, a Web 2.0 entrepreneur. “It’s a re-affirmation that the Web is going to be the future platform.”

Apple’s decision to make Safari available for Windows could also entice more developers to design programs for the iPhone, said Van Baker, vice president at research firm Gartner.

On the other hand, if users can’t access the Internet, they won’t be able to access the program on the iPhone. But that happens less frequently these days, said conference-goer Roger Toennis, chief technology officer for Carrier Access, a telecommunications company in Boulder, Colo. Unless you’re on an airplane or underground, he said, “You’re not going offline anymore.”

During his 90-minute presentation, Jobs demonstrated key features of the company’s latest operating system, Leopard, which will be released in October priced at $129.

“Leopard is going to set an even higher bar,” Jobs said about its capabilities.

It will allow users to run both the Mac operating system and Microsoft’s Windows XP and Vista operating systems. It will also let users easily share files and documents with other computers, even if they aren’t on their home network. The new operating system has an improved interface, organizing files in “stacks” and making it easier to find and view them.

As previewed last year, Leopard will also include “Time Machine,” letting users retrieve earlier copies of a document or locate deleted or misplaced files.

“We have very precious stuff on our computers, yet most of us don’t back up regularly,” Jobs said. “We’re just walking time bombs for something to go wrong.”

Time Machine, Jobs said, will make it simple and automatic for people to back up their files.

Despite all of those developments, Wall Street was less than impressed. Apple shares dipped $4.30 Monday to $120.19 per share.

E-mail Ellen Lee at elee@sfchronicle.com.

BEIJING: China is not curbing spot iron ore imports, Luo Bingsheng, vice president of the China Iron and Steel Association, said on Thursday, denying comments by traders that the country was trying to influence ore price talks with Australian miners.

Several cargoes of Australian iron ore for spot delivery have been stranded at Chinese ports after Beijing delayed issuing permits, traders and shipping officials have said.

Luo said at an industry conference that the association, which represents major steel mills in China, was urging miners to increase the proportion of long-term iron ore deals in their supply to China, the worlds largest steel-making country.

“It is improper for iron ore suppliers to cut term iron ore sales due to force majeure, but raise spot sales,” Luo said.

The report on stranded Australian ore cargoes came this week as Chinese steel mills and Australian miners Rio Tinto and BHP Billiton are in a deadlock over 2008 term prices for iron ore.

Brazils Vale, the worlds largest iron ore producer, in February agreed to 2008 term iron ore prices with Chinese steel mills that are 65 to 71 percent higher than the previous year. This benchmark is normally followed by Australian miners.

But soaring prices for spot material have emboldened Rio and BHP to try for even higher prices based on their freight advantage over Brazil. Shipping costs from Brazil are more than double those of about $30 a ton from Australia.

Chinese steel mills are angry that Australian miners were trying to shift some cargoes into the spot market, where returns still exceed long-term contract prices.