Many foreign-invested importers of Taiwanese goods in mainland China, including those in the market for components for phones and PCs that are assembled for re-export, have moved operations to Southeast Asia or further afield because of trade schisms between Beijing and Washington, analysts said
US officials have placed import tariffs on goods from mainland China since 2018, while also restricting American business with a growing list of Chinese technology firms.
The US Department of Commerce’s Bureau of Industry and Security updated its export controls in 2022 to stop China from obtaining advanced semiconductors, technology and related equipment, with the controls further tightened a year later.
The Biden administration also signed an executive order in August that curbed investment in semiconductors, quantum information and artificial intelligence in “countries of concern”, including China.
The US government is also offering Taiwan chip makers, which are among the world’s most advanced, incentives to set up plants in the US.
There are some Taiwanese exports that had gone to [mainland] China that are now going to Southeast Asia
Supply chain bottlenecks in China due to coronavirus controls up to the end of 2022 also added to the shift in supply chains to outside mainland China.
Taiwan’s exports to the 10-nation Association of Southeast Asian Nations (Asean) bloc reached US$22.281 billion in the first quarter of 2024, up by 33.4 per cent compared to the same quarter last year.
The Asean bloc is an up-and-coming factory region that is seen as relatively neutral toward China and the US.
“This, I think, is a shift in supply chains,” said Darson Chiu, a fellow with the Taiwan Institute of Economic Research.
“There are some Taiwanese exports that had gone to [mainland] China that are now going to Southeast Asia.”
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Investors from Taiwan with factories in mainland China once loomed larger as importers of Taiwanese parts, but US-China trade friction plus cross-strait tensions have prompted some operators to leave while others have been deterred from starting operations.
Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the US, do not recognize Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.
Tech hardware made up 31.7 per cent of Taiwan’s overall exports in the first quarter.
US importers have “lifted” Taiwan’s shipments of chips, while mainland China requires fewer Taiwanese semiconductors because it is developing its own domestic industry, Moody’s Analytics economist Harry Murphy Cruise said.
Mainland Chinese chip production “surged” by 40 per cent in the first quarter to meet demand for electric vehicles, he added.
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