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,
There is much evidence that the Chinese Communist Party (CCP) is sending soldiers from the People’s Liberation Army (PLA) to support Russia’s invasion of Ukraine — and is learning lessons for a future war against Taiwan. Until now, the CCP has claimed that they have not sent PLA personnel to support Russian aggression. On 18 April, Ukrainian President Volodymyr Zelinskiy announced that the CCP is supplying war supplies such as gunpowder, artillery, and weapons subcomponents to Russia. When Zelinskiy announced on 9 April that the Ukrainian Army had captured two Chinese nationals fighting with Russians on the front line with details
On a quiet lane in Taipei’s central Daan District (大安), an otherwise unremarkable high-rise is marked by a police guard and a tawdry A4 printout from the Ministry of Foreign Affairs indicating an “embassy area.” Keen observers would see the emblem of the Holy See, one of Taiwan’s 12 so-called “diplomatic allies.” Unlike Taipei’s other embassies and quasi-consulates, no national flag flies there, nor is there a plaque indicating what country’s embassy this is. Visitors hoping to sign a condolence book for the late Pope Francis would instead have to visit the Italian Trade Office, adjacent to Taipei 101. The death of
By now, most of Taiwan has heard Taipei Mayor Chiang Wan-an’s (蔣萬安) threats to initiate a vote of no confidence against the Cabinet. His rationale is that the Democratic Progressive Party (DPP)-led government’s investigation into alleged signature forgery in the Chinese Nationalist Party’s (KMT) recall campaign constitutes “political persecution.” I sincerely hope he goes through with it. The opposition currently holds a majority in the Legislative Yuan, so the initiation of a no-confidence motion and its passage should be entirely within reach. If Chiang truly believes that the government is overreaching, abusing its power and targeting political opponents — then
RSS