The logo for Microsoft at their office in Herndon, Virginia. Microsoft said Thursday it had joined Hewlett-Packard to set up a research and development centre in Taiwan and tap the island's strength in information technology.

Microsoft said Thursday it had joined Hewlett-Packard to set up a research and development centre in Taiwan and tap the island's strength in information technology.

The investment is expected to generate some 2.5 billion Taiwan dollars (81 million US) in revenue in five years, Microsoft said in a statement.

It did not disclose the size of the investment, but said it was the first time Microsoft and Hewlett-Packard had teamed up on the island.

Taiwan's IT industry is its biggest earner and largest exporter, last year bringing in revenue of around 100 billion US dollars.

It is home to Acer Inc, the world's third largest branded personal computer vendor, as well as Taiwan Semiconductor Manufacturing Co, the biggest contract microchip maker.

"Both Microsoft headquarters and HP are optimistic about the 'soft power' of the technology industry in Taiwan," John Knutsen, director of Global Microsoft Technology Center, said.

Currently, Microsoft runs 16 technology centres around the world.

© 2008 AFP