Global supply chains are transforming from lengthy, interconnected networks to shorter, regionalized structures, driven by the prolonged US-China trade and tech conflicts and pandemic disruptions. While this transition has placed substantial pressure on small and medium-sized suppliers, they are finding ways to adapt.
Amid escalating geopolitical tensions, particularly between the US and China, the origin of manufacturing has become a focal point. Companies like Dell and HP, early movers in shifting production, are reportedly relocating up to 70% of their PC/notebook production from China to other regions.
Over the past two years, what began as preliminary discussions about relocating production capacity has evolved into concrete action, with plans in place for 2025-2026. Meeting these demands has created a ripple effect across the supply chain, compelling component suppliers to follow suit.
Previously, a highly localized supply chain in China supported efficient R&D and production, as major assembly operations were concentrated there. However, as major assembly plants begin to relocate on a large scale amid the changing geopolitical and economic environments, the entire supply chain faces an inevitable transformation. Some manufacturers report that clients now demand production lines outside of China, ideally replicating previous industry clusters.
Nevertheless, supply chain insiders indicate that a broad relocation is unfeasible for many component makers, especially small and medium enterprises. Setting up facilities in diverse locations like Southeast Asia, India, North America, and Mexico entails investments and risks beyond most suppliers' means. Yet these smaller players have found ways to navigate the short-chain model.
According to insiders, the "No China, No Taiwan" (NCNT) trend in the ICT sector is becoming more pronounced. While Chinese production capacity may soon serve only the local market, non-China locations are targeted for global demand. This transition requires choosing optimal regional hubs based on major customers' needs, with Southeast Asia, Europe, or North America as prime options.
Some suppliers are choosing to align with their clients' R&D centers to start production outside restricted areas. Others are managing regional distribution by streamlining international logistics or setting up regional warehouses.
While the short-chain model poses challenges, Taiwan's supply chain resilience remains strong. This restructuring could unlock new growth opportunities for suppliers as they adapt to an evolving global landscape.
