News Briefing This news event stems from the Ministry of Economic Affairs' official announcement on July 30th regarding the new regulation on the "Localization Supply Chain Ratio for Domestic Car Assembly." The regulation stipulates that if local companies choose to introduce car models related to Chinese capital, the manufacturers must commit to a localization supply chain cooperation value ratio, which must be increased annually. Impact analysis Specifically, any automaker that is either a joint venture with Chinese capital and an international brand, an international brand acquired by Chinese capital, an international brand with manufacturing plants in China, or a Chinese brand itself, will be subject to this regulatory mechanism. This means that any vehicle produced by a manufacturer with either capital or production tied to China will be impacted. In other words, the new regulation's scope appears to significantly affect the so-called "domestic cars." However, since the localization supply chain value ratio that manufacturers must comply with only needs to meet 35% (15% in the first year, 25% in the second year, and 35% in the third year) to be in compliance, and given that Taiwan excels in producing electronic components, it should not be difficult for the affected manufacturers to meet the 35% local supply chain ratio. The main challenge will be the time needed to make this transition. From a supply chain perspective, according to data from the Ministry of Economic Affairs press release, currently, domestically assembled new cars (domestic cars) in Taiwan amount to about 250,000 units, accounting for less than 0.4% of the global automobile market. In other words, the long-term impact on Taiwanese supply chains, whether from order shifts or losses, is expected to be limited. Potential benefits may arise from affected car models (e.g., MG), which may need to use more Taiwanese components to comply with regulations. However, potential drawbacks could include market share loss if the transition is slow, allowing imported cars or other domestic brands with lower local component content to gain an advantage. Given the large number of automotive components and the complexity of supply relationships, it is difficult to precisely quantify the impact. However, considering the scope and localization ratio required by the new regulations, as well as the fact that Taiwanese supply chain orders typically come from global sources, the overall impact on the supply chain is expected to be minimal.