Some of Taiwan’s biggest tech companies share the concern that Southeast Asia’s electronics manufacturing ecosystem still has some way to go before it can rival China’s.
Taiwan, the home base of many of the world’s top producers of electronics, is helping its companies to seek out new Asian manufacturing hubs outside China as skyrocketing U.S. tariffs threaten to splinter the global tech supply chain.
Why this shift?
President Donald Trump’s decision to increase tariffs on $200 billion of Chinese imports last week will have convinced any undecided Taiwanese companies of the need to shift some production away from China, Kung Ming-hsin, Taiwan’s minister-without-portfolio in charge of economic affairs, said in an interview in Taipei Tuesday. After Taiwan, according to Kung, Vietnam and India are the next two preferred destinations for Taiwanese electronics companies.
Taiwan has been the primary beneficiary of the shift away from China so far. Since the beginning of the year, 52 local companies have pledged to invest around $9 billion on the island as part of a government program to persuade Taiwanese companies with facilities in China to bring production back home.
While there’s little chance that China will cede its mantle as the world’s electronics workshop anytime soon, that trend is accelerating as the U.S. and China clash in politics and business — and companies scramble to get out of the way. That’s splitting the global production chain from one centered on China to a multi-pronged system with one based in the world’s second-largest economy and another that serves the U.S. and other non-Chinese markets, according to Kung.
Despite a lack of formal diplomatic ties, Taiwanese officials are currently helping companies talk to governments elsewhere in Asia about tax, subsidies and development of industrial zones, Kung said.
But Kung and some of Taiwan’s biggest tech companies share the concern that Southeast Asia’s electronics manufacturing ecosystem still has some way to go before it can rival China’s.