An additional 10 percent tariff imposed on US$300 billion of Chinese goods would affect the consumer-driven tech sector in the second half of this year, analysts said on Friday.
While makers of consumer-driven products — including original design manufacturing (ODM) companies and electronics manufacturing service (EMS) providers — are likely to pass tariffs on to their clients, higher levies would still result in an increase in pricing and thus negatively affect overall end-market demand, analysts said.
US President Donald Trump on Thursday last week tweeted a plan to impose 10 percent tariffs on an additional US$300 billion of imports from China beginning on Sept. 1, affecting products such as notebook computers, tablets and smartphones.
This followed a move in May to increase tariffs on US$200 billion of Chinese goods to 25 percent from 10 percent, affecting electronics, machinery, automobiles, bicycles, petrochemicals, steel, machine tools, hand tools, plastics, and screws and nuts.
Trade-sensitive sectors face a difficult time. PC ODMs, in particular, are expected to suffer the most because the additional tariffs apply to consumer electronics goods that had been spared in earlier rounds of levies and also because they have higher capacities in China, while about 30 percent of their shipments go to the US.
“We believe smartphone and wearable products will face more difficulties in moving production out of China due to their labor-intensive nature. For notebooks, although it is more automated manufacturing versus smartphones, there is still limited capacity (less than 10 percent) outside of China,” Yuanta Securities Investment Consulting Co (元大投顧) analysts led by Vincent Chen (陳豊丰) said in a report. “We estimate relocation for notebooks will take at least three to five months.”
PC brands, such as Acer Inc (宏碁) and Asustek Computer Inc (華碩), might also suffer, as they outsource to ODM companies whose capacity in China is too big to move in the short term, the analysts said, adding that these brands might be forced to take up the 10 percent tax, inevitably increasing product prices.
In the smartphone business, Hon Hai Precision Industry Co (鴻海) and Wistron Corp (緯創) are building additional capacity in India, but Yuanta analysts said the Indian production would be aimed at the domestic market initially.
If these EMS providers cannot pass the additional costs onto clients, the higher tariffs would lead to higher average selling prices, negatively affecting overall end-market demand, the analysts said.
In addition, as new iPhones would have limited upgrades this year, there would be more downside risk for iPhone shipments in the US market going forward, they said.
As a result, supply chain firms with higher sales exposure to Apple Inc’s iPhone, iPad and MacBook products — including flexible printed circuit board suppliers Flexium Interconnect Inc (台郡) and Zhen Ding Technology Holding Ltd (臻鼎), smartphone camera lens supplier Genius Electronic Optical Co (玉晶光), LCD backlight module maker Radiant Opto-Electronics Corp (瑞儀) and contract electronics manufacturer Pegatron Corp (和碩) — would be affected the most by the additional tariffs, the analysts said.
Another sector that might face increased headwinds is the flat-panel industry, as monitors are on the US$300 billion list, they said.
“The panel industry is highly agglomerated and it is thus difficult to relocate the entire supply chain in a short time. As the overall panel industry is already in an oversupply situation, the new tariffs will cripple demand in the US, thus intensifying pressure on panel makers, which we believe will have a negative impact on Taiwanese panel players,” they said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last