Taiwan's hi-tech sector, including major companies like Acer, is shifting production to India, Thailand, and Vietnam to hedge against political risk and address labor shortages. This move comes as the supply chain in Taiwan is already moving to other countries. Taiwan's tech sector is facing global political shifts due to the trade war between mainland China and the United States. US laws now ban Taiwanese firms from selling sensitive parts to American customers if they also sell them to mainland China. Taiwanese tech giants are diversifying production away from Taiwan to lower geopolitical risks and shipping costs [f21145fa].
In addition to the political considerations, Taiwan and India have signed a deal to allow Indian workers to help plug a stubborn labor shortage. Media in Taiwan and India have said as many as 100,000 Indian nationals could eventually reach Taiwan to work in factories, on farms, and in hospitals. Approval of the labor deal is still pending parliamentary approval in Taipei. Taiwan aims to attract 400,000 more foreign workers by 2030 [9087aecb].
Major Taiwanese tech developers are embracing a shift towards South and Southeast Asia, attracted by lower labor costs, improving infrastructure, and growing domestic markets. Vietnam and Thailand are currently the most favorable countries for notebook production, while India is becoming more attractive due to its talent pool and government incentives. Taiwanese companies are also investing in these countries to reduce economic dependence on China and mitigate risks from a potential US-China conflict or cross-Strait conflict [f21145fa].
Quanta Computer and Foxconn Technology have already started production in Vietnam, and Taiwanese electronics firms have been approved for projects in Thailand. India is attracting Taiwanese investment due to its large market, abundant labor force, and investment-protection pact with Taiwan. However, companies with small staff and limited product scope often choose to stay in Taiwan to maintain quality control. Taiwanese companies with factories in mainland China are not eager to leave due to the market size and vibrant supply chain. China's aggressive competition with low prices has led Taiwan brands to outsource some entry-level products to Chinese original design manufacturers to reduce production costs [f21145fa].
Taiwanese investment in India has reached US$5.6 billion, and Taiwan is seen as a better destination for Indian workers compared to other places they go for migrant labor. Indian employees in Taiwan could acquire skills and experience from the island's advanced semiconductor chip sector to be transferred to India's foundries [9087aecb].
This diversification strategy by Taiwan's hi-tech sector is aimed at reducing its reliance on China, mitigating the risks associated with geopolitical tensions, and addressing labor shortages. By shifting production to India, Thailand, and Vietnam, Taiwanese companies are hedging against political risk, lowering shipping costs, and tapping into a new labor pool. This move is driven by the changing dynamics in the region, the impact of the US-China trade war on global trade relationships, and the need to attract foreign workers to fill the labor gap [f21145fa] [9087aecb].