Taiwanese manufacturers, particularly electronics companies, are entering the third wave of expansion into the US to cope with the accelerating realignment of global supply chains, the US-China technology race and geopolitical risks.
The goals are unlike those of the previous wave three or four decades ago — when local firms set up factories in China or Southeast Asia to take advantage of lower labor costs and a massive domestic market in China. The latest overseas trend comes as the US-China technology race reaches a pivotal point, with a broad range of Chinese goods facing stricter import rules and heavier tariffs, from lithium batteries used in non-vehicle applications to mature-node semiconductors and green-energy projects.
As the “non-red supply chain” policy becomes mainstream, Taiwanese manufacturers are facing pressure to increase “local” supply or build production sites outside China. The US-China trade battle is creating new growth opportunities for Taiwan’s chipmakers, chip testing and packaging services providers, and solar companies, if they can establish US manufacturing sites or supply US customers from places close to the US with preferential tariff treatment, such as Mexico.
Taiwan Semiconductor Manufacturing Co (TSMC) on July 16 unveiled a new round of investment in Arizona, pledging to add US$100 billion to build advanced chip manufacturing fabs to make 2-nanometer and next-generation chips, as well as advanced chip packaging facilities. That would bring TSMC’s total investment in the US to US$265 billion. The firm attributed the massive capital investment primarily to demand among US customers for artificial intelligence (AI) chips.
GlobalWafers Co, the world’s No. 3 silicon wafer supplier, on July 11 said that it is gearing up to expand capacity in the US after securing a 10-year supply agreement from US memorychip maker Micron Technology Inc along with US$500 million of strategic funding. The partnerships would help boost the US’ semiconductor manufacturing ecosystem and local critical materials supply capabilities, it said, adding that it has allocated some capacity from its Asian fabs to support US demand.
GlobalWafers’ parent company, Sino-American Silicon Products Inc, a solar module supplier, on Wednesday last week said it is creating a new US$40 million US joint venture with United Renewable Energy Co to produce solar modules in the US to capitalize on green energy demand from AI data centers.
The US on June 23 imposed a steep tariff of 50 percent on Chinese solar cells, modules and related products to curb overcapacity. The US market consumes about 40 to 45 gigawatts of solar panels per year.
Additionally, the Office of US Trade Representative has launched an investigation into mature-node chips made in China and is to implement new tariffs on less-advanced chips from China, such as 28-nanometer chips, in May next year. That would create new business opportunities for local chipmakers such as United Microelectronics Corp. Those chips are mostly used in vehicles, network devices and industrial controllers.
Large companies such as Hon Hai Precision Industry Co and Wistron Corp are spending lavishly on AI server capacity to meet robust demand from US cloud service providers and Nvidia Corp.
Taiwan’s small and medium-sized enterprises (SME) are taking a different approach by combining their resources to access overseas markets. The Taiwan Electrical and Electronic Manufacturers’ Association on June 17 said it aims to set up the business group’s first overseas technology park in Mexico to assist Taiwan’s SMEs to tap into the US market. The park will offer similar infrastructure to science parks in Taiwan and create a single window to communicate with local governments on behalf of members of the association.
In addition to Mexico, the association is considering establishing science parks in the US, Poland, India and the Philippines, it said. The association has more than 3,000 members, with 67 percent having paid-in capital of less than NT$100 million (US$3.09 million). It hopes to build complete supply chain ecosystems overseas to enhance production efficiency and lower costs, replicating the effect of science parks in Taiwan.
Taiwanese companies are well-known for their operational agility. Local manufacturers have beaten rivals with their ability to save on costs and manage their capacity. The latest developments are forcing them to win customers and drive business growth by optimizing capacity allocation and presenting distinctive value as local supply becomes a key factor in enhancing supply chain resilience.
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