Friday , August 12 2022

Trade war causes the production of tea suppliers from China


More Taiwanese computer and technology companies are arranging US market-linked production in the latest US-China commercial military adjustments. (Reuters pic)

TAIPEI: Inventec Corp, HP Inc's computer makers, said it would change production of notebooks for the US market from China in months, adding to the exodus of the tea industry industry as the world's two largest economies escalate their trade war. .

Inventec will relocate its entire U.S. computer operations to its home base of Taiwan, said its president Maurice Wu, the largest migration since Donald Trump has set tariffs on $ 300 billion in U.S. imports that will kick off next month.

It wants to complete that wholesale transition within two to three months, he told investors about a post-earnings move on Tuesday.

Wu's company also co-owns Apple Inc's AirPods, which, along with HP's PC computers, are responsible for about a third of its revenue.

From Inventec to Apple assembler Hon Hai Precision Industry Co, Taiwanese companies, which manufacture most of the electronic world, reckon their dependence on the world economy 2 is not diminishing as Washington-Beijing tensions decline.

Rising tariffs on Chinese-made products threaten to erase their margins and end a well-oiled, decade-long supply chain.

Microsoft Corp, Inc, Sony Corp and Nintendo Co are among those now weighing their options away from the fire line, such as Southeast Asia and India.

Alphabet Inc's Google has transferred much of its production of US limited patrols to Taiwan, Bloomberg News reported.

"The trade war is very painful for us," Wu said, concluding a call during which executives shared how production changes had hurt the company's efficiency and margins.

The Inventec change marks one of the most dramatic relocations since Trump announced his decision to cut tariffs by 10% on US $ 300 billion in Chinese imports, which included consumer devices from cell phones to notebooks, beginning in September.

Spurred by customers that include household names such as Dell Technologies Inc and Nintendo, many Taiwanese contract manufacturers are now developing cash flow plans, changing select mount operations, or exploring alternative locations.

On Tuesday, Compal Electronics Inc chief executive Martin Wong said his company, a rival to Inventec, had also delivered some notebook lines to Taiwan and was considering investing more in Vietnam if tariff conflicts continue.

Barry Lam, president of Quanta Computer Inc., told reporters on Tuesday that his company is sending a repossession of some business to Southeast Asia, though he didn't mention time.

Chief Financial Officer Elton Yang said Quanta will now seek to meet customers' demands for production outside China with its Taiwanese facilities.

US companies, long accustomed to using China as the world's meeting place, seek to get out of the fire as tensions rise and Beijing shows a willingness to bow to foreign firms within its own borders.

It is a change that may herald a broader long-term trend as Beijing and Washington continue to propagate everything from market access to trade.

The trade war threatens to destroy a complex world supply chain involving many countries beyond just China and the United States.

Many components that go into devices are not manufactured in the United States, although they are designed there.

An Apple-designed phone chip may be coming out of a factory in Taiwan, then packaged somewhere else, in a process that prepares it for integration into a circuit, before being shipped to China for iPhone mounting.

However, major manufacturers have shifted production in really significant quantities and China's status as the world's leading electronics base is likely to decline sometime soon.

Foxconn Technology Group said it had enough capacity to make all iPhones linked to the US outside of China if needed, though Apple has so far not called for such a change.

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