Thursday, August 9th 2018

Taiwan ODMs Pulling Back Production from Mainland in Wake of US Import Tariffs

You could see more "Made in Taiwan" and lesser "Made in China" on the shelves of your friendly neighborhood Microcenter, as major Taiwanese original device manufacturers (ODMs) are considering moving manufacturing back from Mainland China to Taiwan. ODMs are contract manufacturers of PC hardware, which take designs from [mostly western] electronics companies, and turn them into marketable product.

Among the first such ODMs is Quanta Computer, which manufactures some components in Shanghai, with server assembly either in Fremont, California; or just outside Cologne, Germany. The move is triggered by harsh import tariffs imposed by the Trump Administration on imports of electronics goods from China (PRC), running up to 25 percent, as part of the ongoing trade-war between the world's top-two economies. Tech stocks are rattled at the prospect of cheap hardware imports getting significantly pricier for American consumers.
Source: DigiTimes
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34 Comments on Taiwan ODMs Pulling Back Production from Mainland in Wake of US Import Tariffs

#1
StrayKAT
The whole point of Taiwan was to screw over the Chinese (umm.. and Japan I guess). They should have never went to China in the first place.
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#2
Readlight
Soon it will be made in Africa or south Amerika countries should be fighting now for job places so then corporation net can continue to do their evil business.
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#3
TheLostSwede
"Readlight said:
Soon it will be made in Africa or south Amerika countries should be fighting now for job places so then corporation net can continue to do their evil business.
Nope, not any time soon. Not enough infrastructure in the cheap countries and too much unrest.
The new places are Indonesia, Vietnam and maybe the Philippines. After that, Cambodia and Laos.
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#4
R-T-B
"StrayKAT said:
The whole point of Taiwan was to screw over the Chinese (umm.. and Japan I guess). They should have never went to China in the first place.
The whole point of Taiwan is more to simply exist.

It's essentially China's original government in exile.
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#5
TheGuruStud
Good. Now, tariff tools made in China. Gimme some good Taiwanese stuff.
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#6
R-T-B
"TheLostSwede said:
too much unrest
I wouldn't put Brazil on the "unrest" list, but you are right about infrastructure for certain.

"TheGuruStud said:
Good. Now, tariff tools made in China. Gimme some good Taiwanese stuff.
You do realize you can already buy tools made anywhere you want without tariffs?
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#7
StrayKAT
"R-T-B said:
The whole point of Taiwan is more to simply exist.

It's essentially China's original government in exile.
I didn't say merely to exist. They were a military and economic buffer to China.
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#8
TheGuruStud
"R-T-B said:
I wouldn't put Brazil on the "unrest" list, but you are right about infrastructure for certain.



You do realize you can already buy tools made anywhere you want without tariffs?
Not really. Cheap junk is promoted over quality. The best ratchet set I ever used was made in Taiwan and they couldn't get a foot hold due to the China garbage with brand names. I can no longer buy them except at insane prices/quantities. Effectively blocking the garbage would let the good stuff fill the void. No one will enter US market as is.
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#9
R-T-B
That's... not how a global market really works.

You get what you pay for, largely. That will never change. You think tarriffs will magically make quality cheap? No, not at all.

"StrayKAT said:
I didn't say merely to exist. They were a military and economic buffer to China.
I did, not you.
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#10
TheLostSwede
"R-T-B said:
The whole point of Taiwan is more to simply exist.
It's essentially China's original government in exile.
Original? Not really, you need to read up on history. It kind of was the "original" Republic of China after the last emperor was ousted. The KMT which was the ruling party of that Republic of China is no longer in charge of Taiwan, as the DPP is now in majority and they're not very keen on any kind of merger back with the mainland, as they come mainly from southern Taiwan, where there are more Taiwanese people than in the north where the KMT and friends settled.

"R-T-B said:
I wouldn't put Brazil on the "unrest" list, but you are right about infrastructure for certain.
I wouldn't call Brazil cheap either. If you re-read what I said, I said there isn't enough infrastructure in the cheap countries and in most of the cheap countries, there's unrest.
There's obviously some electronics industry in Brazil, but it's not cheap to manufacture there, it's simply done due to the insane import duties imposed by the government.
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#11
R-T-B
"TheLostSwede said:
Original? Not really, you need to read up on history. It kind of was the "original" Republic of China after the last emperor was ousted.
Essentially what I meant (post-WW2) but thank you for clarifying.
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#12
R0H1T
"TheLostSwede said:
Original? Not really, you need to read up on history. It kind of was the "original" Republic of China after the last emperor was ousted. The KMT which was the ruling party of that Republic of China is no longer in charge of Taiwan, as the DPP is now in majority and they're not very keen on any kind of merger back with the mainland, as they come mainly from southern Taiwan, where there are more Taiwanese people than in the north where the KMT and friends settled.


I wouldn't call Brazil cheap either. If you re-read what I said, I said there isn't enough infrastructure in the cheap countries and in most of the cheap countries, there's unrest.
There's obviously some electronics industry in Brazil, but it's not cheap to manufacture there, it's simply done due to the insane import duties imposed by the government.
Well if you look around, there's at least a dozen more alternatives to China, most of them cheaper. The problem for them however is the higher end components like SoC, display panels, NAND, DRAM or batteries they'll have to import from China (not necessarily made by Chinese brands) to make entire phones, PC's et al. In China you have everything, pretty much in close vicinity & of course the CCP also makes sure these companies don't leave China that easily.
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#13
TheLostSwede
"R0H1T said:
Well if you look around, there's at least a dozen more alternatives to China, most of them cheaper. The problem for them however is the higher components like end SoC, display panels, NAND, DRAM that they'll have to import from China (not necessarily made by Chinese brands) to make entire phones, PC's et al. In China you have everything, pretty much in close vicinity & of course the CCP also makes sure these companies don't leave China that easily.
Well, a lot of that stuff is still made in Taiwan, Japan and Korea. In fact, there aren't any cutting edge or even high-end chip fabs in China. A few things are also made in Singapore, Thailand, Malaysia and of course in the US. China tends to be mostly assembly or lower-end stuff.
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#14
R0H1T
"TheLostSwede said:
Well, a lot of that stuff is still made in Taiwan, Japan and Korea. In fact, there aren't any cutting edge or even high-end chip fabs in China. A few things are also made in Singapore, Thailand, Malaysia and of course in the US. China tends to be mostly assembly or lower-end stuff.
That's old news, China has by far the most number of fabs operational or under construction in the world.
Not many of them might be leading edge, but that's more to do with the state sponsored corporate espionage than anything else.

https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants
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#15
StrayKAT
"R-T-B said:
That's... not how a global market really works.

You get what you pay for, largely. That will never change. You think tarriffs will magically make quality cheap? No, not at all.



I did, not you.
My bad.. wasn't sure what to think, so just clarified myself. :)
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#16
TheLostSwede
"R0H1T said:
That's old news, China has by far the most number of fabs operational or under construction in the world.
Not many of them might be leading edge, but that's more to do with the state sponsored corporate espionage than anything else.

https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants
I'm sorry, but I don't see anything in that link that contradicts what I said. There are two 28nm fabs and one (Samsung owned) 20nm fab based in China in that list. Anything 2x nm is not high-end any more and sub 10nm is cutting edge. But by all means, kiss China's ass if that want you want to do in the forums here. Me? I'd rather have nothing to do with China. And please stop trying to point out things I didn't write here and instead try reading the entire sentences instead of cherry picking whatever suits your agenda here.
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#17
R0H1T
The reason China's getting all these (cheap) fabs is largely because of economies of scale, then there's the fact that China probably subsidizes a large part of greenfield projects that would cost 2-5x in other advanced economies, without tax breaks or other such incentives.

Yeah that's why I said "not" leading edge, which is different from high end because GF's 22nm FDX is high end.
"TheLostSwede said:
I'm sorry, but I don't see anything in that link that contradicts what I said. There are two 28nm fabs and one (Samsung owned) 20nm fab based in China in that list. Anything 2x nm is not high-end any more and sub 10nm is cutting edge. But by all means, kiss China's ass if that want you want to do in the forums here. Me? I'd rather have nothing to do with China.
Need to brush up on your English? Is that what you call kissing China's whatever :rolleyes:
"R0H1T said:
but that's more to do with the state sponsored corporate espionage than anything else.
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#18
FordGT90Concept
"I go fast!1!11!1!"
"TheLostSwede said:
Nope, not any time soon. Not enough infrastructure in the cheap countries and too much unrest.
The new places are Indonesia, Vietnam and maybe the Philippines. After that, Cambodia and Laos.
South America, barring near the equator where the drug war rages, is quite stable. Brazil, Argentina, and Chili would make great substitutes for Asian labor.


I could easily see Taiwan and Hong Kong being added to the tariffs in time. Their currency is based on the Yuan which is being unlawfully pegged to USD. As such, as much reason to sanction Taiwan and Hong Kong as China.
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#19
Final_Fighter
"R-T-B said:
That's... not how a global market really works.

You get what you pay for, largely. That will never change. You think tarriffs will magically make quality cheap? No, not at all.



I did, not you.
i have to disagree with you in part on this. its true that quality will never be "cheap". what can happen tho is if the cheaper version of a product or its knockoff is no longer half the price or 3 quarters the price of the quality one, people may start buying the quality product. as the demand increases because the crappier one is no longer a viable option, the quality focused company may actually be able to maximize profits by re adjusting its prices in a order to sell more product. competition may actually begin to take place and then thats were we really get to have good products that dont need to be thrown out after a month. its better for the environment and good for the workers when products are made in countrys that try and maintain a high standard of sustainability. countrys around the world and particularly in Europe should be looking at this situation as an opportunity to benefit.
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#20
R-T-B
"Final_Fighter said:
i have to disagree with you in part on this. its true that quality will never be "cheap". what can happen tho is if the cheaper version of a product or its knockoff is no longer half the price or 3 quarters the price of the quality one, people may start buying the quality product. as the demand increases because the crappier one is no longer a viable option, the quality focused company may actually be able to maximize profits by re adjusting its prices in a order to sell more product. competition may actually begin to take place and then thats were we really get to have good products that dont need to be thrown out after a month. its better for the environment and good for the workers when products are made in countrys that try and maintain a high standard of sustainability. countrys around the world and particularly in Europe should be looking at this situation as an opportunity to benefit.
If the whole world implemented Trump's tariffs, that might work out. They obviously don't though.
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#21
TheLostSwede
"FordGT90Concept said:
South America, barring near the equator where the drug war rages, is quite stable. Brazil, Argentina, and Chili would make great substitutes for Asian labor.


I could easily see Taiwan and Hong Kong being added to the tariffs in time. Their currency is based on the Yuan which is being unlawfully pegged to USD. As such, as much reason to sanction Taiwan and Hong Kong as China.
Again, I was talking about the low cost countries. No-one will move production to the higher cost nations.

And no, the New Taiwan Dollar is not pegged to the Yuan, it's pegged to the US Dollar. You clearly have very little understanding of the politics between Taiwan and China. The current government in Taiwan will do almost anything to distance itself from China and the current situation between China and the US.
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#22
FordGT90Concept
"I go fast!1!11!1!"
"TheLostSwede said:
...it's pegged to the US Dollar.
Which is why USA is instituting tariffs in the first place. China has pegged and floated their currency off the USD since 2005. They deliberately devalued their currency to make Chinese products upwards of 38% cheaper for buyers spending USD than they really are worth. It's what powered their explosive manufacturing growth since.

"TheLostSwede said:
The current government in Taiwan will do almost anything to distance itself from China and the current situation between China and the US.
Then they need to let their currency trade independently.



Literally a few minutes old: China paper rebuts trade war criticism, says 'an elephant can't hide' The tariffs are working. They're attempting to use propaganda to vilify the USA while internally, they fight.
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#23
TheLostSwede
"FordGT90Concept said:
Which is why USA is instituting tariffs in the first place. China has pegged and floated their currency off the USD since 2005. They deliberately devalued their currency to make Chinese products upwards of 38% cheaper for buyers spending USD than they really are worth. It's what powered their explosive manufacturing growth since.

Then they need to let their currency trade independently.

Literally a few minutes old: China paper rebuts trade war criticism, says 'an elephant can't hide' The tariffs are working. They're attempting to use propaganda to vilify the USA while internally, they fight.
Huh? Do you have any idea how currencies work? There are tons of currencies pegged to the US$, Euro and other strong currencies. This is very normal, but it doesn't mean that the exchange rate doesn't fluctuate, but if it fluctuates too much, it can hurt the local economy badly. Besides, for the past two years, the NT$ has been very strong, quite the opposite to the RMB, which means Taiwanese products aren't as cheap as they were some years ago. In 2016 the exchange rate was a lot more favourable and business was booming, now business is still doing ok in Taiwan.

I don't disagree that China needed a good slap, maybe even a good spanking, as they've done a lot of nasty things simply to win market share. However, if American and other foreign companies, including Taiwanese, weren't so eager to do business with/in China, would we even be in the situation we're in today?
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#24
FordGT90Concept
"I go fast!1!11!1!"
"TheLostSwede said:
This is very normal, but it doesn't mean that the exchange rate doesn't fluctuate, but if it fluctuates too much, it can hurt the local economy badly.
It's called floating and currencies are supposed to reflect their economy. Any currency that isn't allowed to trade freely is being propped up by the currencies it is pegged to while simultaneously dragging said currencies down. It is manipulation, illegal, fraudulent, and selfish behavior.

"TheLostSwede said:
I don't disagree that China needed a good slap, maybe even a good spanking, as they've done a lot of nasty things simply to win market share. However, if American and other foreign companies, including Taiwanese, weren't so eager to do business with/in China, would we even be in the situation we're in today?
Corporations only have one goal in existence: chase the almighty dollar. If there's a cheaper way to manufacturer, they are duty bound to exploit it. It's the role of government to make sure the playing field is level.
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#25
StrayKAT
The funniest thing currently is suddenly seeing the Left wing media buddy up with the Kochs… just because they want Trump to fail. I could remember a mere two or three years ago that the Kochs were their favorite whipping boys. And now they apparently think the Kochs actually care about overseas workers (or employing immigrants out of the goodness of their hearts). This is like "befriending" a dragon (two dragons, rather) to deal with that wily snake in your garden. edit: Probably calling them left wing is a misnomer. They're just superficially so.. and this proves it.

edit:

I'm not well versed enough to make a proper critique of Free Market capitalism, but I understand the revolt against it.. It's not like it doesn't have some serious downsides. And so far, it doesn't seem like Trump's protectionism isn't quite as disastrous as has been warned. Perhaps it will fail, but it's suspect that it isn't given much of a chance... going on 200 years now (perhaps longer?). It's not like this hurts in some blanket sort of way anyhow. Trump just puts emphasis more on unilateral dealing.
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