Taiwanese Component and Equipment Manufacturers Target Vietnam for Diversifying Production Beyond Mainland China
According to the South China Morning Post, Acer, the world's fifth-largest computer supplier, expanded its influence in India last year by licensing its brand name to a local startup. This move comes as Acer monitors other Taiwanese tech hardware suppliers relocating part of their production overseas.
CEO Jerry Kao stated, "I see that the supply chain has started to move out of Taiwan. They are moving to Vietnam or Thailand or elsewhere. We are following that trend as well. Whenever we see risks, we start diversifying. Acer has assembly operations in countries like India and Indonesia, so if something happens, we can shift to those factories."
With 7,725 employees and a revenue of $7,4 billion last year, Acer joins other major Taiwanese tech developers in shifting production to South Asia and Southeast Asia, instead of expanding in Taiwan or Mainland China.
"Regarding laptop production, Vietnam and Thailand are currently the most favored countries due to low labor costs, improving infrastructure, and developing domestic markets," said Sanesha Huang, an analyst at market research firm TrendForce.
"India is also becoming attractive with its abundant labor force and government investment incentives," the analyst added.
Taiwan's tech industry is facing global political changes arising from the trade war between Mainland China and the US since 2018. The US now prohibits Taiwanese companies from selling sensitive components to both US and Mainland Chinese customers simultaneously. Taiwanese tech giants have diversified production outside to prevent risks that could hinder the delivery of these components to international customers.
According to some suppliers, customers may ask Taiwanese suppliers to relocate to avoid geopolitical risks and reduce transportation costs. "Every customer wants the supply chain to be diversified in various markets," said James Hsieh, Deputy Director of Development at AcBel Polytech. AcBel has factories in China and is seeking new investments in Southeast Asia. "We will not withdraw from China, but will supplement in Southeast Asia or South America," the AcBel executive added.
Sysgration, a Taiwanese automotive electronic systems designer, is exploring setting up a factory in Vietnam, according to senior product manager Tony Wang. The company, with over 600 employees, operates two factories in Mainland China and one in the US. "If customers want production in China, we can produce in China, and if they want production in the US, we can produce in the US," Wang said, noting that the proximity between China and Vietnam offers a "geographical advantage" for transportation.
Vietnam is highly regarded for its low costs and new transport infrastructure. Taiwan has invested in Vietnam for about 15 years, with approved investments totaling $1.23 million from January 2023 to April this year, according to the Taiwan Investment Approval Ministry. Last year, Taiwan's Quanta Computer signed an agreement to start production in Vietnam, and iPhone assembler Foxconn Technology is already present there.
Before 2018, Taiwanese companies typically chose Mainland China for setting up factories. The mainland offered relatively cheap land and labor, a solid supply chain, and a large domestic market to sell products. Thousands of Taiwanese companies in various fields have operated there.
Source: https://vietnambiz.vn/lan-song-chuoi-cung-ung-dai-loan-dich-chuyen-toi-viet-nam-202461316436784.htm
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