Recent developments have called into question the extent to which local agglomeration adequately encapsulates the dynamics of Taiwan's information technology industry. Under the pressure of globalization, global production networks have come to the fore of Taiwan's industrial strategy. By means of in-depth case studies on a PC and an IC firm, this paper sets to explore issues as to the Taiwanese firms' position within these global production networks and the way in which IT is used to facilitate the Taiwanese firms' participation in the global production networks. On balance, the use of IT in conjunction with the reshuffling of business models can help the Taiwanese firms to strengthen their position within the global production networks. In particular, the essence of IT application is to facilitate networked firms participating in setting the rules of the game for industrial competition, preferably in the international arena.