Taiwan's high-tech industry should brace for a prolonged US-China trade war with enhanced business flexibility, according to Pegatron chairman TH Tung.
Tung recently participated in a cybersecurity event held by the Monte Jade Science and Technology Association of Taiwan (MJ Taiwan) where he addressed his views on the latest US semiconductor bans, which he sees as an extension of the US-China trade war. Because tensions between the US and China have yet to ease, Tung believes Taiwan technology companies must learn to be more flexible to deal with the new changes.
It was previously believed that the US would not cut ties with China when it comes to software, hardware, and services, but the US is reaching this goal one step at a time, according to Tung. As a result, Tung believes the US will continue to impose more restrictions in the future, and as a part of the global supply chain, Taiwanese companies must learn to carefully handle them.
Tung noted that there is no unified response to the current situation among companies. Companies are basing their response on applications, customers, end markets, technology sources, capital markets, and manufacturing bases.
Prior to the trade war, Taiwanese companies had already begun moving their production bases out of China and toward Southeast Asia. Tung noted that Pegatron is now in the process of rapidly expanding production in various countries.
Tung said that responses to the current changes are all temporary, and that such controls are not ideal from a business or technology standpoint, as they restrict economic and technological growth. However, he believes Taiwan will pull through.
In terms of the current market situation, Tung believes that the situation for each product and industry is different. While the outlook for automotive electronics, electric vehicles (EV), network communications, and 5G is still optimistic, inventories for consumer electronics such as computers and smartphones remain high.
