Taiwanese manufacturers are facing a second wave of supply chain reallocation challenges as they grapple with a precarious trade environment triggered by the re-election of former US president Donald Trump. His victory last week has created jitters among local companies in the global supply chain, with executives scrambling to hasten the transfer of production out of China. Trump threatens to impose a universal 10 percent tariff on imports with a 60 percent tariff on goods from China amid an escalating trade dispute between Washington and Beijing. He also said he could make Taiwan pay for US protection.
Taiwanese companies have been taking precautions to allocate more production to North America or Southeast Asia to meet customers’ requests to avoid any risks from geopolitical tensions. Large-scale manufacturers plan to pass on the additional costs, including higher import tariffs, to customers. However, the companies, particularly those in the semiconductor sector, need to safeguard their technological advantage while rebalancing production.
Taiwan Semiconductor Manufacturing Co (TSMC) has come under the public spotlight lately due to speculation that the world’s largest contract chipmaker might be under pressure to move 2-nanometer chip manufacturing to the US earlier than planned, as Washington aims to build up its advanced technology capacity amid cross-strait tensions. That speculation raises concern that Taiwan could lose its competitive edge in offering the most advanced semiconductor technologies. TSMC did not plan to make 2-nanometer chips at its Arizona fab before 2028 based on its overseas manufacturing road map, and to comply with Taiwanese regulations. The chipmaker is only allowed to make chips using one-generation older technology overseas than it uses domestically. That means TSMC has to ramp up 1.4-nanometer technology from its local fabs prior to making 2-nanometer chips in the US.
Chip packers and testers follow their customers. ASE Technology Holding Co’s US subsidiary, ISE Labs Inc, on Friday unveiled its latest land acquisition in Tonala, Mexico, with the goal of expanding its global footprint to increase ASE’s presence in North America. ISE’s latest move followed its July announcement of expanding capacity in San Jose, California, targeting artificial intelligence (AI) and high-performance computing business. ASE, based in Kaohsiung, is the world’s biggest chip packager.
Trump’s re-election has created uncertainty throughout the electronics supply chain. For the first time in about two decades, Asustek Computer Inc, the world’s No. 5 notebook computer vendor, is building a server production line in the US to secure customers’ orders. Asustek, like its global peers HP Inc and Apple Inc, farm out production to electronics manufacturing service providers. The new production line is to open by the end of this year. Server assemblers Wistron Corp, Quanta Computer Inc and Inventec Corp — all of which are partners of US AI chip giant Nvidia Inc — have announced new investments in the US or Mexico. Wistron’s board of directors approved a US$72 million investment in new capacity expansion in Texas, US$81 million in Mexico and US$40 million in India.
Taiwanese manufacturers have close partnerships with US customers, relationships that are heavily influencing local manufacturers’ investments and production site selection amid the changing US political landscape and Washington’s expected trade policies. Any wrong decision could harm the companies’ competitiveness and Taiwan’s economy, given that the US accounted for 24.1 percent of Taiwan’s exports in the first nine months of this year, the highest in 25 years. It is essential for private businesses and the government to work together to smoothly transfer production, especially for smaller-scale companies to minimize the effects on exports and the economy.
As the Chinese Communist Party (CCP) and its People’s Liberation Army (PLA) reach the point of confidence that they can start and win a war to destroy the democratic culture on Taiwan, any future decision to do so may likely be directly affected by the CCP’s ability to promote wars on the Korean Peninsula, in Europe, or, as most recently, on the Indian subcontinent. It stands to reason that the Trump Administration’s success early on May 10 to convince India and Pakistan to deescalate their four-day conventional military conflict, assessed to be close to a nuclear weapons exchange, also served to
China on May 23, 1951, imposed the so-called “17-Point Agreement” to formally annex Tibet. In March, China in its 18th White Paper misleadingly said it laid “firm foundations for the region’s human rights cause.” The agreement is invalid in international law, because it was signed under threat. Ngapo Ngawang Jigme, head of the Tibetan delegation sent to China for peace negotiations, was not authorized to sign the agreement on behalf of the Tibetan government and the delegation was made to sign it under duress. After seven decades, Tibet remains intact and there is global outpouring of sympathy for Tibetans. This realization
After India’s punitive precision strikes targeting what New Delhi called nine terrorist sites inside Pakistan, reactions poured in from governments around the world. The Ministry of Foreign Affairs (MOFA) issued a statement on May 10, opposing terrorism and expressing concern about the growing tensions between India and Pakistan. The statement noticeably expressed support for the Indian government’s right to maintain its national security and act against terrorists. The ministry said that it “works closely with democratic partners worldwide in staunch opposition to international terrorism” and expressed “firm support for all legitimate and necessary actions taken by the government of India
The recent aerial clash between Pakistan and India offers a glimpse of how China is narrowing the gap in military airpower with the US. It is a warning not just for Washington, but for Taipei, too. Claims from both sides remain contested, but a broader picture is emerging among experts who track China’s air force and fighter jet development: Beijing’s defense systems are growing increasingly credible. Pakistan said its deployment of Chinese-manufactured J-10C fighters downed multiple Indian aircraft, although New Delhi denies this. There are caveats: Even if Islamabad’s claims are accurate, Beijing’s equipment does not offer a direct comparison
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