Taiwan PCB firms could slow down production in Thailand due to Trump's tariffs

Taipei, April 12 (CNA) Taiwanese printed circuit board (PCB) suppliers are likely to slow down their production in Thailand, now that the Southeast Asian country has been slapped with a 37 percent reciprocal tariff by U.S. President Donald Trump, according to a former chairman of the Taiwan Printed Circuit Association (TPCA).

Speaking with CNA earlier this week, Li Chang-ming (李長明), who just stepped down as TPCA chairman in March, said it was a surprise that Thailand had been slapped with such a high tariff. As a result, Taiwanese PCB makers could become very cautious about expanding in the Southeast Asian country, where 14 Taiwanese firms run production bases, he said.

Li is a senior advisor to Taiwan-based Ajinomoto build-up film (ABF) supplier Unimicron Technology Corp.

In addition to Unimicron, another 13 Taiwanese PCB firms have investments in Thailand, making the country Taiwan's major overseas manufacturing hub for PCBs, which are used in many electronic products. These Taiwanese companies include Compeq Manufacturing Co., ZhGolen Ding Technology Holding Ltd., and Gold Circuit Electronics Ltd.

Tripod Technology Corp. has built facilities in Vietnam while HannStar Board Corp. and Global Brands Manufacturer Ltd. run production lines in Malaysia.

Li made the comments after the Trump administration announced a fresh round of tariffs on April 2 U.S. time.

Trump declared a 10 percent baseline tax on imports from all countries starting April 5. Countries with larger trade surpluses with the United States would face higher duties beginning April 9, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (26 percent), Vietnam (46 percent) and Thailand (37 percent).

On Wednesday afternoon U.S. time, Trump announced a 90-day pause on the new measures, with reduced 10 percent duties to be applied instead to all countries but China.

Li said he was surprised that the Trump administration imposed higher tariffs on Thailand and Vietnam than on Taiwan, adding that Trump's move poses a challenge to Taiwanese PCB makers, particularly those manufacturing in Thailand.

Li said these Taiwanese PCB makers went to Thailand to extend their global footprints since their clients requested them to do so to avoid the impact of an escalating trade war between the U.S. and China.

However, Li said, they now encounter a bigger headache from the Trump administration's latest tariff actions, and they are expected to slow down their efforts to manufacture in Thailand products sold to the U.S. market.

Meanwhile, the tariff war between Washington and Beijing remains a top issue for Taiwanese PCB producers, Li said, as they have built sprawling production lines in China. Trump has hiked duties on goods made in China to 145 percent, while China hit back by raising tariffs on American merchandise to 125 percent.

Li suggested that Taiwanese PCB producers should reconsider what would be a better strategy regarding their investments in China, suggesting that their facilities in the Chinese market should sell their goods in China instead of exporting them.

As for Trump's calls to bring manufacturing jobs back to the U.S., Li said it was not easy for Taiwanese PCB suppliers to relocate their investments to the U.S. market, because it lacks a comprehensive supply chain and has higher labor costs, adding that production in the U.S. could become a heavier financial burden than tariffs to many of these Taiwanese firms.

Chiu Shih-fang (邱昰芳), an analyst with the Taiwan Industry Economic Services under the Taiwan Institute of Economic Research, said that compared with tech gadget assemblers, component makers like PCB suppliers are expected to encounter higher barriers to producing in the U.S. market.

Chiu said she has deeper concerns about end-user demand for products such as electric vehicles, servers, notebook computers, and smartphones containing PCBs, as the desire for such goods is expected to be hit by higher product prices caused by tariff hikes.

She said once end-user demand weakens, demand for PCBs could be affected accordingly. In addition, if their clients ask them to share higher costs from tariff hikes, these PCB firms could face additional financial risks.