The COVID-19 pandemic has undersocred the world's over-reliance on China's manufacturing capacity, and accelerated the diversification of the global supply chain, with many firms seeking to building or already building more manufacturing plants in South East Asia. Such a "China+" production diversification strategy presents the nultinational corporations (MNC) with plenty of new opportunities and challenges - in terms of operation, compliance and environment.
In view of intensifying US-China confrontation and Taiwan actively promoting its New Southbound Policy, many Taiwan-based suppliers intend to meet increasing capacity demand by relocating manufacturing to Southeast Asia and building new industrial clusters there to tap the demographic and geographic advantages as well as rapidly growing market demand in the region. They look to replicate their experiences in China and make Southeast Asia the next world factory that will support rising needs as the global supply chain makes transitions to accommodate "G2" (US vs China) developments.
Global supply chain restructuring that is being accelerated by the US-China trade war and the COVID-19 pandemic gears toward two directions in view of geopolitical factors: "China+1" - the business strategy to still tap the China market but diversify production to other countries to avoid punitive US tariffs on Chinese goods; and "China-free" - the initiative to drive self-sufficiency to counter China's dominance and protect national security.
Global server shipments, after reaching the peak of 2020 in the second quarter, are estimated to have slipped 6% sequentially in the third quarter and to drop another 12% in the fourth quarter, as a result of the coronavirus pandemic disrupting the buying pattern, according to Digitimes Research.
While many still believe the US-China tech war will be over along with the end of the US presidential election, most China experts at US think tanks believe it will be difficult for the two superpowers to return to their pre-trade war relationships.
Taiwan Comfort Champ Manufacturing will export a turnkey solution for producing medical masks, including materials, equipment and quality inspection technology, to Thailand, and is in talks about exporting it to Indonesia and the US, according to company chairman Andy Chen.
Around the world, the Covid-19 pandemic, and the strict lockdowns which governments have imposed to try to control the spread of infection, have brought short-term upheaval to every aspect of people's lives.
When Chinese president Xi Jinping declared war on COVID-19, I knew the outbreak in China must have been very grave. At the time, many Taiwanese CEOs and managers had returned home from China for the Lunar New Year break. They couuld not go back to work in China after the holiday, and yet these "stranded" CEOs provided us with very good sources of first-hand information about what was actually happening to the supply chains in China during the outbreak. As an analyst with 35 years of experience under my belt, and with strong ties with many industry leaders in Taiwan, I felt a strong commitment to recording what I was witnessing at this turning point.
As manufacturers re-open after COVID-19 related lockdowns, economic and supply chain disruptions may be felt beyond 2020. How companies shift in the short-term and plan for the long-term will be factors in defining "new normal" for the component industry.