Electronics suppliers in Taiwan look forward to greater opportunities for their high-quality products in the post-pandemic trade resurgence.
Taiwan’s electronics industry, including the components sector, has experienced dramatic changes as a result of the trade war between the US and China that began in 2018. Caught in the crossfire, suppliers have since been revising their business strategies and rolling out countermeasures to dodge the exchange of tariffs between the world’s largest economies.
For companies that own or have ties with factories in China, reshoring has become an option, especially with full government support. Some are transferring part of production activities elsewhere or relocating completely. Most, including manufacturers operating solely in Taiwan, are tapping into a broader sourcing network to guarantee unhampered access to materials and components.
Between these movements, Taiwan has been benefiting from the shift in orders, especially from companies exporting to the US. Quoting the United Nations Conference on Trade and Development or UNCTAD, an article in Forbes in late 2019 reported that “trade diversion effects” brought in $4.2 billion to Taiwan, the bulk of which was for office machinery and communication equipment.
When the COVID-19 pandemic hit and China shut down its manufacturing, Taiwan’s realignments were more or less in place. In August 2020, exports reached a single-month high of $31.2 billion, according to news site Focus Taiwan. The report said the Ministry of Finance attributed this to “peak season sales, booming business in emerging technologies and increased stay-at-home orders related to the pandemic.”
However, the Ministry of Finance also warned this revival might be momentary and an overall decline could still be possible as the pandemic and the trade dispute continue. Still, economists such as Angela Hsieh of Barclays Bank plc expressed optimism in a survey conducted by Bloomberg. “We are relatively constructive on Taiwan’s outlook, and believe Taiwan’s export performance will continue to outshine regional peers,” Hsieh said.
View from the ground
If anything stands out in the challenges in 2020, it is that Taiwan is a model of preparedness and response. And this has further solidified its position as a global technology powerhouse amid the trade war and the pandemic.
The island’s industries remain confident of weathering possible scenarios in the months ahead and are gearing up for the opportunities in the post-pandemic period.
Suppliers in the electronics sector consider the year’s difficulties a chance for them to showcase what better-quality products Taiwan has for the next big trends in electronics. They are already reaping the benefits of 5G, deployment of which the pandemic may have slowed on the one hand and has heightened in importance on the other.
Should the trade dispute progress in coming years, many are already set up to recalibrate business strategies, implement temporary measures or make them permanent.
Elka International Ltd is shifting production from China to Taiwan and South Asia, considering this a permanent diversification solution to keep its export business stable and ensure room for growth. It has already started increasing the number of supply chain partners in Taiwan. The company, which specializes in cable assemblies, connectors and other connectivity products, looks forward to greater adoption of HDMI 2.1, 5G and IoT, and the release of USB4 devices.
Win Industry Co. Ltd, which offers a range of silicone rubber, rubber and plastic products and molds, will continue to pursue R&D. It will focus marketing efforts on the European market to offset the decrease in exports to the US. Win is positive it will ride out the current difficult situation, noting start of recovery in shipments in June and banking on more prospects in home security and medical electronics in 2021 onward.
Power supplies specialist FranMar International Inc. has been sharing the burden of tariffs with customers. While export shipments went down by as much as 20 percent, the supplier keeps moving forward to strengthen its business capability. FranMar has been working with other companies to build up a comprehensive range of products, with a goal of offering one-stop solutions. It is confident the electronic components industry will continue to get a boost from the automotive, industrial and computer segments.
Kunming Electronics Co. Ltd, a manufacturer of connectors and cable assemblies, is on track to meet its business goals. It has not been affected by the trade war and the pandemic, with export shipments still on the rise.
Eljintek Inc., with R&D and manufacturing operations entirely in Taiwan for its power supplies range, has seen no business disruption and is sending products in bigger volume overseas. The company offers medical-grade power supplies.