Taiwanese component manufacturing corporations Pegatron and Qisda recently announced plans to expand production capacity outside China. Pegatron plans to move its fabrication capability outside the mainland while Qisda is building a new facility in Vietnam.
The two organizations decided to diversify their supply chains following an escalation in Sino-American trade friction.
Pegatron and Qisda’s Manufacturing Changes
Apple supplier, Pegatron, announced plans to increase its non-China production ratio to 10 to 20 percent by next year. CEO Syh-Jang Liao recently told investors his company is ramping up its global fabrication footprint because of mounting international tension. Presently, the firm maintains most of its factories in China, which leaves it vulnerable to dueling government tariffs and sanctions.
Liao noted Pegatron is renting a plant in Vietnam that will go online in early 2021. The executive also said his corporation is looking to establish facilities in India, which affirms a March Bloomberg report.
Similarly, Taipei-based electronics manufacturing service provider Qisda revealed it is building a new factory in Vietnam on Monday. Peter Chen, the company’s chief executive, said his firm is constructing a new factory in Southeast Asia because of worsening relations between the U.S. and China. Chen also stated Qisda is considering shifting more of its production line beyond the Sino nation.
Vietnam’s Popularity Among Microelectronics Manufacturers
Pegatron and Qisda are not the only microelectronics companies to relocate part of their operations to Vietnam recently. Printed circuit board maker Wistron earmarked $1 billion to build new factories in several areas, including the Southeast Asian country. Besides, Apple reportedly asked its partners to consider moving 15 to 30 percent of their supply chains to the same region last year.
In addition, CNBC stated Google and Microsoft intended to move their device assembly operations to Vietnam three months ago.
While the above-listed brands named the Sino-American trade conflict as motivating their increased fabrication diversity, many regions offer relocation benefits. This month, India and Taiwan launched new incentive programs to attract major foreign component makers. However, Forbes points out affordable labor costs, and a strong national manufacturing tradition makes Vietnam especially appealing.
Although Chinese-American relations are swiftly normalizing, the expansion plans of firms like Pegatron and Qisda are gradually making Vietnam a player in the international manufacturing landscape.