【April, 2023 - Taoyuan】

Since last year, the Taiwanese PCB industry has seen a fad in investment in Southeast Asian countries. The production transfer at this point is different to the cost-driven one. This is mainly because customers consider the security of production bases. In the past, Taiwanese PCB companies had relocated their bases from Taoyuan to Kunshan to Hubei. The supply chain integrity is the main reason why they are moving to Thailand. The cluster may face the imbalanced distribution of resources, but we believe that the resilience and flexibility of Taiwanese PCB companies will certainly overcome challenges, and grasp new opportunities.

Manufacturing transfer begins with supply chain security.
Tho global manufacturing industry has seen serval production transfers from the United States and Japan to Taiwan and Korea to Mainland China after the World War II. The past transfers are driven by the comparative advantages and the costs. However, since the 2008 financial crisis, trade protectionism has emerged in each country. In recent years, the world has gone through the COVID-19 pandemic, Russia-Ukraine war, and intensifying U.S.-China friction. Therefore, international powers and brands are reconsidering the fragile supply chain that is highly based in Mainland China, and have started reconstructing the global value chain.

Taiwan’s PCB industry has been keeping up with the global trend of the supply chain relocation
The Taiwan PCB industry begins with the establishment of factories in Taoyuan by a US company, Ampex, in 1968. Subsequently, a complete production clusters was developed from Taoyuan as its center. In the 1990s, the Chinese economic reform led to the Taiwanese companies’ investment in Mainland China. WUS Printed Circuit was the first one to invest in Mainland China. Kunshan has become the second production cluster for Taiwanese PCB companies.
Since 2000, Mainland China has gradually become the world’s factory, while Taiwanese companies have outperformed their Japanese counterparts and have the highest PCB market share worldwide since 2011, due to their production competitiveness in Mainland China. As Mainland China’s economy rapidly grows, the production costs in its coastal provinces have surged so that they have relocated production to inland provinces, such as Hubei, Sichuan.
As the PCB industry has many tedious processes of manufacturing with huge capital expenditure, it is difficult for its factories to relocate and it relies on the support from nearby supply chain partners. For this reason, Taiwanese PCB manufacturers have more than 60 percent capacities in Mainland China and 37% in Taiwan. For many years, Taiwanese companies have not valued the Southeast Asian countries because of their planning and management in Taiwan and Mainland China. However, since last year, the above-mentioned reasons, trade game, international political instability and end customers’ concern about supply chain disruption have driven this trend of the supply chain relocation worldwide.

Thailand is the best choice for Taiwanese PCB companies concerned about excessive concentration.
Thailand is the country with the highest PCB output among Southeast Asian countries, having a solid foundation for the development of the PCB industry value. Moreover, its friendly people and open business environment with a high level of internationalization have made it become the best choice for Taiwanese companies to base its production factories at this time. In the last two years, the Taiwanese PCB companies, such as Unimicron, COMPEQ, Wus Printed Circuit (Kunshuan) Co., Dynamic Electronics and Complex Micro Interconnections, and suppliers of raw materials, such as Taiflex, TUC and ITEQ Corporation, have established their factories in the vicinities of Bangkok. At this time, in addition to the Taiwanese companies that have actively invested in Thailand, Chinese counterparts have relocated their factories to Southeast Asia. For instance, Aoshikang Technology, Chian Eagle Electronic Technology, JOVE PCB and FSQuality also announced their investments in Thailand, respectively.
To help the industry relocate its supply chain, TPCA has organized two investment tours to Thailand, one investment tour to Vietnam and one to Malaysia. On July 21 of this year, it will hold the Thailand PCB Industry Link Summit where the Thai government, Thai and Taiwanese PCB companies, and industry park representatives will be invited. This communication platform will help those who want to invest in Thailand, and it will work with the Thailand Printed Circuit Association to discuss the major issues relevant to how the PCB industry chain moves to Thailand.
This global manufacturing transfer focuses on the security of the supply chain. Particularly, the cross-strait PCB industry chain prefers Thailand. Like Taoyuan, Kunshan and Hubei, the areas around Bangkok are expected to form a new cluster. While the industry cluster has advantages such as lower costs and increased production efficiency, the peers may face problems, such as resource exclusion, stability of power and water supply, emission regulations, land and waste disposal, technical talent shortage. The ever-balanced supply and demand may change because of the price war. This is the issue when the PCB industry is gaining its foothold worldwide. It is believed that Taiwanese company will overcome this challenge through their resilience after several production transfers over 50 years and reach new heights for the Taiwan PCB industry.