Amid the turmoil on the global stage in recent years, Pegatron chairman TH Tung has highlighted three major challenges in the short to mid-term, including updates to the US's reciprocal tariff policies, exchange rate fluctuations that may have further long-term impacts, and competition from China, Japan, and South Korea. For Taiwanese manufacturers, some may need government policy support as they further seek overseas expansion, while those remaining rooted in Taiwan will need to enhance automation to maintain their competitive edge amid fierce market pressures.
At the invitation of the Taoyuan City Government, Tung spoke at the 2025 Taoyuan Enterprise Summit on September 12, in his capacity as chairman of the Monte Jade Science and Technology Association of Taiwan.
In his keynote speech, centered on survival strategies for Taiwanese firms amid shifting international dynamics, Tung identified tariffs and exchange rates as the two most crucial factors currently affecting Taiwan's industries. On September 12, the US Commerce Secretary signaled that a trade deal with Taiwan is imminent, yet the ever-changing situation largely depends on the whims of US President Donald Trump, who is using tariffs as leverage against Taiwan's semiconductor sector.
In Tung's opinion, Trump is targeting smaller sectors while neglecting America's own strengths, seeking to pursue in areas where it lacks an advantage. As an example, he cited Trump's recent announcement to revive the long-declining US shipbuilding industry: in his opinion, instead of trying to revive such uncompetitive sectors, it would be better to leave shipbuilding to Japan and South Korea, and leave semiconductors to Taiwan.
Tung pointed out three critical factors that will significantly impact Taiwanese businesses in the short to mid-term: imminent tariff policy announcements, long-term currency volatility, and intensifying international competition. These factors will not only affect industry development but may also determine the survival of some businesses.
In terms of international competition, the main rivals are China, Japan, and South Korea. Since Taiwan and South Korea have similar industrial structures and export products, competition will be fair if both countries face similar tariffs; however, any disparities could lead to uneven impacts.
Meanwhile, the recent "involution" phenomenon of over-competition in China has severely disrupted global markets. Citing Formosa Plastics Group's recent operational losses as an example, Tung attributed part of the difficulties to factors specific to China, as it now boasts a production capacity ten times greater than Formosa Plastics, and is exerting pressure on markets through low-priced exports. However, the petrochemical industry is far from the only one to face this challenge, as oversupply pressures have mounted on other Taiwanese industries, and even global giants like Intel.
On the currency front, Tung noted that the New Taiwan Dollar has recently stabilized around NT$30 to the US Dollar, yet small and medium-sized enterprises (SMEs) still face considerable pressure. Trump desires a strong US Dollar yet seeks manufacturing competitiveness at the same time, which are two inherently conflicting goals. A 20–30% depreciation of the US Dollar might boost exports, but would also drive inflation and lead to new economic challenges. In Tung's opinion, the Taiwanese government should carefully manage exchange rates to minimize harm to traditional industries.
Government policies crucial for SMEs in global trade storms
With the results of the latest round of Taiwan-US tariff negotiations forthcoming, Tung highlights two aspects to note. Firstly, Trump may target Taiwan's trade surplus with the US, which may soon exceed US$100 billion. Although some products enjoy preferential low tariffs due to the US technology sector's heavy reliance on Taiwan's supply chain, many traditional industries and SMEs may struggle, forcing them to expand overseas.
However, since SMEs lack the vast resources of major corporations like Quanta, Foxconn, and Pegatron, they face significantly more challenges in entering foreign markets, and the wide range of different regulations and systems across different countries makes solo efforts difficult.
Tung called on the government to play an active "national team" role in helping SMEs to lower barriers for setting up facilities overseas. SMEs going solo overseas will often face challenges concerning infrastructure; even Pegatron faced similar issues when building its Mexico plant, as the local government provided land but required the company to bear water and electricity costs independently due to insufficient infrastructure.
Citing Singapore as an example, Tung highlighted its government's efforts in planning industrial zones equipped with integrated utilities, medical care, education, and living facilities, offering a one-stop service to allow SMEs to focus fully on production. In Tung's opinion, for Taiwan to hold its own on the global stage, traditional industries and SMEs must proactively pursue overseas expansion or automation transformation, and the government should offer more comprehensive support to help enterprises weather ongoing international economic turmoil.
Article edited by Jack Wu
