China-US tensions force Taiwanese tech firms to consider a 'plan B' - India or Vietnam

Strained relations between Beijing and Washington, cross-Strait tensions and America’s high manufacturing costs are pushing Taiwanese companies in new directions.A flurry of technology deals signed last month between Taiwanese and American companies have been touted as a sign of 'deepening partnership' between the economies, but the island's multinationals are increasingly eyeing production bases free of friction between the US and China.

Data and expert opinions show that these multinationals, the staple of Taiwan's US$759 billion economy, are taking an ever larger share of their capital to cheap, well-connected places, including Vietnam and once-unthought-of India. Of those, five cover co-operation in 5G technology. Intel and Taiwan-based Quanta Cloud Technology will start a project called 5GxAI Open Lab, for example, while Taiwanese smartphone developer HTC agreed with American telecoms firm Lumen Technologies to co-develop virtual and augmented reality technology.

In October, the US Commerce Department passed new semiconductor export restrictions on dozens of Chinese companies and research institutions days after the Pentagon expanded its own blacklist. In comparison, approved investments in mainland China reached about US$18.9 million in the first eight months of 2022, down from US$29.5 million over the same period a year ago and US$70.2 million approved in December 2021.

China has lost more appeal since it began imposing draconian coronavirus controls, snarling logistics, in early 2020. India is known for low costs and a large domestic market, though language barriers and sometimes clashing business cultures remain challenges. Vietnam, a manufacturing hub seen as a reliable and cheaper alternative to China, is also gaining interest from Taiwanese manufacturers.

Taiwanese firms still manufacture some products at home to protect trade secrets. TSMC is "trying to strike a balance", Ma said, by investing in the US while upgrading its domestic technology.

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