Local-for-local manufacturing is becoming more strategically important amid escalating geopolitical and economic tensions between the US and China. Taiwanese electronics firms are moving some manufacturing to the US, while retaining a portion in China and building new capacity in a third region. That is probably the optimal solution amid the chaos US President Donald Trump’s fickle tariff policy has created over the past week. As Trump on Monday wrote on his Truth Social platform that “there was no tariff ‘exception,’” supplying products locally could be one of the best responses to mitigate the damage from US tariffs, such as cost surges and profit erosion.
Before the White House announced its tariff policy, European chip giants had doubled down on producing commodity-grade chips in China to optimize global supply chain resilience by localizing production. STMicroelectronics is collaborating with Chinese contract chipmaker Huahong Group to produce 40-nanometer microcontrollers by the end of this year, as China is the world’s biggest new-energy market.
For Taiwanese manufacturers, labor costs have been the most important deciding factor in deciding where to build a factory. Now, tariffs would be at the center of corporate executives’ minds when assessing where to house their new factories and how to relocate manufacturing capacity. Moving production out of China is not the only solution; local demand has to be considered as well. Semiconductor equipment and parts suppliers even have to add new production lines and capacities in China given rapidly growing demand. That demand is part of China’s desperate efforts to build up its own chip manufacturing capacity and a whole semiconductor equipment supply chain to counteract the US’ semiconductor curbs.
China is the world’s No.1 semiconductor equipment market, accounting for 42 percent of global sales and surpassing Taiwan and South Korea last year, SEMI data showed. China bought about US$49.55 billion of semiconductor tools last year, surging 35 percent from a year earlier.
As Taiwan Semiconductor Manufacturing Co plans to invest US$165 billion to build six chip fabs in the US and a research-and-development center, Taiwan’s semiconductor equipment and parts suppliers are also seeking to build production lines in the US to cope with their key customers’ demand and avoid hefty duties on imports. Taiwan faces a significant “reciprocal” tariff of 32 percent on imports to the US, which Trump has temporarily put on hold for 90 days, with semiconductor and pharmaceutical goods exempted from the levy.
Considering the high cost of labor in the US, some semiconductor firms have opted to build facilities in Mexico to serve their US customers, although imports from Mexico face a 25 percent tariff. For corporate executives, that is still a good deal, as it would still be about half the cost of operating one in the US.
Smartphone and laptop computer makers urgently need to adopt a local-for-local strategy, as their major manufacturing sites are in China and Vietnam, which face staggering 170 percent and 46 percent US tariffs. Hon Hai Precision industry Co, a major iPhone supplier, said it is scouting multiple sites in the US to build factories. About 90 percent of iPhones are made in China. To cope with the punitive US tariff, Hon Hai has suspended certain Chinese iPhone assembly lines for US supply. The US market made up 30 percent of Apple’s overall iPhone sales. However, Hon Hai still has to assemble iPhones in China for the Chinese market and those beyond the US. China remains the world’s most cost-efficient manufacturing site.
With not a single country nor product to be spared from US levies, semiconductors and mobile phones are just two among a variety of local electronics adding pressure to manufacturers to take on a local-for-local strategy if they want to survive Trump’s tariff war.
The gutting of Voice of America (VOA) and Radio Free Asia (RFA) by US President Donald Trump’s administration poses a serious threat to the global voice of freedom, particularly for those living under authoritarian regimes such as China. The US — hailed as the model of liberal democracy — has the moral responsibility to uphold the values it champions. In undermining these institutions, the US risks diminishing its “soft power,” a pivotal pillar of its global influence. VOA Tibetan and RFA Tibetan played an enormous role in promoting the strong image of the US in and outside Tibet. On VOA Tibetan,
Former minister of culture Lung Ying-tai (龍應台) has long wielded influence through the power of words. Her articles once served as a moral compass for a society in transition. However, as her April 1 guest article in the New York Times, “The Clock Is Ticking for Taiwan,” makes all too clear, even celebrated prose can mislead when romanticism clouds political judgement. Lung crafts a narrative that is less an analysis of Taiwan’s geopolitical reality than an exercise in wistful nostalgia. As political scientists and international relations academics, we believe it is crucial to correct the misconceptions embedded in her article,
Sung Chien-liang (宋建樑), the leader of the Chinese Nationalist Party’s (KMT) efforts to recall Democratic Progressive Party (DPP) Legislator Lee Kun-cheng (李坤城), caused a national outrage and drew diplomatic condemnation on Tuesday after he arrived at the New Taipei City District Prosecutors’ Office dressed in a Nazi uniform. Sung performed a Nazi salute and carried a copy of Adolf Hitler’s Mein Kampf as he arrived to be questioned over allegations of signature forgery in the recall petition. The KMT’s response to the incident has shown a striking lack of contrition and decency. Rather than apologizing and distancing itself from Sung’s actions,
US President Trump weighed into the state of America’s semiconductor manufacturing when he declared, “They [Taiwan] stole it from us. They took it from us, and I don’t blame them. I give them credit.” At a prior White House event President Trump hosted TSMC chairman C.C. Wei (魏哲家), head of the world’s largest and most advanced chip manufacturer, to announce a commitment to invest US$100 billion in America. The president then shifted his previously critical rhetoric on Taiwan and put off tariffs on its chips. Now we learn that the Trump Administration is conducting a “trade investigation” on semiconductors which
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