Monday , December 9 2024

Taiwanese suppliers move manufacturing abroad

07-11-2024

HANOI/ TAIPEI: Elon Musk’s SpaceX asked Taiwanese suppliers to transfer manufacturing off the island, leading to some relocating portions of their supply chain, according to sources employed by and close to the equipment makers and corporate documents.

A source at a company that is one of the numerous subcontractors that provide components for SpaceX’s Starlink satellite internet products said SpaceX asked their manufacturers to produce outside of Taiwan because of geopolitical risks, pushing at least one to move production to Vietnam.

A second source who collaborates with Taiwanese satellite component makers on the island said suppliers were directly asked by SpaceX to transfer manufacturing abroad.

Chin-Poon Industrial (2355.TW), opens new tab, a satellite component maker which said it was recently a SpaceX supplier, told Reuters the US Company requested they move their manufacturing from Taiwan to Thailand for new orders “mostly due to geopolitical considerations”. It did not elaborate.

The sources declined to be identified because the information was not public. SpaceX did not reply to requests for comment.

SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year it is an “integral part” of China, drawing sharp criticism from the Taiwanese government.

China views democratically governed Taiwan as its own territory and has staged almost daily military drills around it over the past five years and has never renounced taking the island by force. Taiwan rejects China’s sovereignty claims.

China’s drills have increased in intensity since 2022, with the latest war games it carried out last month replicating a blockade of the island. Amid the potential for devastating disruptions to their supply chains, some Taiwanese companies in the strategic satellite and semiconductor industries are taking steps to reduce their reliance on domestic manufacturing.

A Vietnam-based investment adviser told Reuters in October SpaceX representatives said in a private meeting in March 2023 the company was interested in setting up a manufacturing hub for satellite equipment in Vietnam and sought advice on protecting intellectual property.

When contacted by Reuters about Taiwanese SpaceX suppliers moving abroad, Taiwan’s economy ministry responded, “Short-term political factors should not affect the supply chain relationship between international satellite companies and Taiwan manufacturers.”

Taiwanese SpaceX supplier Wistron NeWeb Corporation (6285.TW), opens new tab (WNC) this year began producing routers and other network gear for Starlink at its factory in the northern Vietnamese province of Hanam, about an hour south of Hanoi, two of the plant’s workers and a contractor said.

WNC’s expansion in Vietnam is largely due to orders from SpaceX, said one of the workers.

The Hanam factory plans to at least double its 3,000-strong workforce, the contractor and one of the workers said. Outside the factory, several banners advertised job offers at the plant, Reuters reporters observed in mid-October.

The first source familiar with SpaceX’s requests to move out of Taiwan is an employee of a Vietnam-based foreign-owned supplier whose components for printed circuit boards are in Starlink’s ground equipment through WNC-made components.

The source said a SpaceX vendor they work with that supplies WNC was directly told by SpaceX to produce outside of the island. (Int’l News Desk)

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