With Trump's imminent return to the White House threatening a new wave of global tariffs, Taiwan's tech industry is moving swiftly to fortify its supply chain strategy. At a November 12 industry forum, experts outlined a new "two enhancements, two reductions" doctrine--enhancing integration and control while reducing centralization and dependency--as critical for navigating the approaching trade turbulence that could impact manufacturing bases from Mexico to Vietnam.
Industry sounds alarm on trade risks
Sharon Wu, division head at the Industry, Science, and Technology International Strategy Center under the Industrial Technology Research Institute (ITRI), painted a complex picture at the Industrial Development Administration (IDA) and Institute for Information Industry (III) event. Beyond the existing challenges of US-China trade tensions and pandemic aftermath, Wu warned that Trump's return to the White House signals just one aspect of evolving global dynamics.
Supply chains face mounting pressure from global powers' strategic competition, supply chain disruption risks, and the erosion of low-cost manufacturing advantages. She emphasized that supply chains must become more flexible and resilient to shield against these multiple threats, implementing the new doctrine across their operations to shield against these multitudes of threats.
Investment trends shift away from China
Wu presented data revealing Taiwanese investment trends: From 2002 to 2017, Taiwan focused primarily on China. However, the US-China trade war prompted companies to diversify their investments, with a significant shift toward New Southbound countries, North America, and Europe. By 2022, Taiwanese investments in New Southbound countries had exceeded those in China for the first time, a trend that continues. The region now accounts for 28.8% of Taiwan's total investments, the highest of any region.
ICT sector races to realign production
Taiwan's ICT industry, generating over US$800 billion in annual revenue with 75% of production overseas, faces particular pressure to adapt, according to Kevan Tsai, vice president of the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA).
Historically, Tsai noted, China has served as the primary overseas production base for Taiwan's ICT sector, with companies building highly integrated supply chains there over three decades. However, geopolitical tensions since 2018-2019 have prompted the exploration of alternative manufacturing sites in Southeast Asia and Mexico.
Tsai cautioned that Trump's return poses significant risks, particularly his potential imposition of tariffs on countries like Vietnam and Mexico, despite their free trade agreements with the US. While production shifts are typically slow and costly, the rapidly changing international landscape demands vigilance. He noted that although Taiwan's New Southbound investments will likely continue, companies must closely monitor US market developments.
