In 1998, as Russia’s Mir space station travelled hundreds of miles above the earth, Jonney Shih was monitoring its progress with particular interest down on the ground in Taiwan. The chairman of Asus was keen to know how the company’s laptops were faring in the stressful conditions on a 637-day trip into space.

By 1997, Asus had been making motherboards for PC manufacturers for eight years, and Mr Shih decided the Taiwanese company needed to make its own computers in order “to make Asus a real brand”. To help establish its reputation, Asus “put reliability as the number-one criterion — we needed to beat all the other machines”, says the 63-year-old, wearing his usual dark suit and open-necked shirt, in a grey armchair at Asus’s Taipei headquarters.

So it was a milestone when Asus’s early laptops survived the trip to Mir, unlike those of more established rivals.

Asus flourished as a consumer-focused business, and alongside Taiwan rival Acer became one of the world’s top-five PC producers. By 2008, with HTC spearheading Google’s launch of the Android smartphone operating system, the island’s consumer electronics industry was a pillar of the economy, with a global heft disproportionate to Taiwan’s population of less than 25m.

Today, however, the outlook looks less bright. Global PC sales last year came in at about 289m units, according to research company Gartner — nearly a fifth below the high point of 2010, as smartphone-focused consumers spurn bulky computers. Since the start of 2011 Acer has racked up cumulative losses of NT$27bn ($836m), with the shrinking overall market compounded by loss of market share to the likes of China’s Lenovo. Acer’s shares have fallen 90 per cent during that period, as have those of HTC, which has been marginalised in the Android smartphone market by South Korea’s Samsung and Chinese rivals.

Asus, however, has weathered the PC decline with small rises in market share and a shift towards more expensive devices, as well as a belated but modestly successful move into smartphones. At about $6bn, its market capitalisation is roughly where it was five years ago, and analysts expect it to report net profit for last year of about $530m. This is slightly higher than the 2010 figure, but nearly a quarter below its record earnings of 2012.

The contrast with Acer is bittersweet for Mr Shih, who spent his formative years there, culminating in leading its research and development work. When four of his engineers in 1989 started their own “small but beautiful company”, they asked Mr Shih to lead them.

He asked Acer’s founder, Stanley Shih — no relation — for permission. “Acer was in difficulty … finally Stan convinced me to stay,” he says. But he provided financing to the fledgling company, and four years later he joined Asus as chief executive.

Mr Shih recalls instilling a culture of hard work after finding an engineering lab almost empty early one evening: “That’s a crisis, frankly speaking,” he says. He overhauled the hiring policy too, by picking promising graduates en masse from the elite National Taiwan University. Then came the decision to move into consumer electronics, which still makes up the overwhelming majority of Asus’s sales.

One factor behind Asus’s resilience in this field, say analysts, has been its pursuit of fresh sizes and configurations of its devices, helping it to secure a strong position in new and relatively high-demand product segments as PC sales languish.

In 2007 Asus unveiled the Eee PC — the first netbook, or miniature laptop. The innovation was widely copied by rivals, launching a new product category that enjoyed strong demand until Apple’s iPad kick-started the tablet market three years later.

Such innovation was the result of a shift in Asus’s culture away from a simple focus on technical performance, says Mr Shih. “To have a complete kind of innovation you need to start from the user desirability.” In 2011, Asus rolled out the Transformer, which can be adjusted for use as either tablet or laptop — another idea soon emulated by companies including Microsoft. In a colourful advertisement for Asus’s latest version, a talking cartoon bird chides a smartphone user: “You’re just making life difficult for yourself!” it says. “Glued to your tiny screens, giving yourself a migraine while you try to write a novel with your thumbs?”

Mr Shih similarly defends the PC. “People say the PC is declining, but it only makes the desirability more clear. The PC is for professional, productivity computing,” he says.

However, both the PC and tablet sectors are clearly being cannibalised by larger-screen smartphones. So last year Asus made a jump into smartphones with the ZenFone, whose development team was subject to Mr Shih’s demanding standards. At one point he held a crisis meeting to figure out a way to fit the battery and speaker into the space. “Around midnight or 2 o’clock in the morning, one of the engineers work it out,” Mr Shih says. “If it’s a normal business meeting, I don’t think you can have a breakthrough... if it’s not painful, normally it’s not a hero product.”

The cash resources and business networks created by its PC operation have helped Asus’s smartphone division to modest success in some developing countries: it had 12 per cent of Indonesia’s smartphone market and 7 per cent of Russia’s in the third quarter of 2015, according to Canalys. But Asus is a late entrant, arriving seven years after the iPhone. More , margins have been narrowed by competition from Chinese producers.

“The final winner sometimes is not the first runner,” Mr Shih insists. Asus predicts its revenue from mobile dev will overtake that from PCs in 2018, and it expects to sell 30m smartphones in 2016, from about 21m last year. This has drawn scepticism from some analysts: Nomura, for example, predicts sales of 22m units in 2016.

Smartphones are only one of the growth areas Mr Shih is targeting, however. Since handing over the chief executive role to Jerry Shen in 2008, he has remained the main public face of the company. But he also has more time to foster product areas aimed at compensating for the slowdown in Asus’s declining main business.

In vocabulary peppered with business school jargon, one of Mr Shih’s favourite words is “megatrend”: in this case, the shift towards the “internet of things”, in which consumers rely on a constellation of networked devices.

Asus is expanding its range of such pr , from smartwatches to a smart television device made for Google, and Mr Shih is overseeing secret projects in robotics and augmented reality technology — a view of the real world embellished with computer-generated effects.

“In the PC era, the box was the centre. Now we have to agree the cloud is the centre,” he says. “I do care a lot about the megatrend. Otherwise you may become irrelevant.”