US

Taiwan Enterprises Adjust Supply Chains Under Shadow of US-China Trade War

By Kitty Wang

As the U.S.-China trade war intensifies, many Taiwanese companies are reorganizing their global supply chains to move away from China.

The 2019 SelectUSA Investment Summit, hosted by the U.S. Department of Commerce in Washington, D.C., concluded on June 12, 2019. Taiwan brought the largest delegation for two consecutive years, surpassing South Korea, China, India, and Japan. The Assistant Secretary of the U.S. Department of Commerce and the Deputy Assistant Secretary of the State Department both attended the welcome dinner.

David Meale, Deputy Assistant Secretary for Trade Policy and Negotiations, State Department said, “We are thrilled that the largest delegation is from Taiwan, and that is why I came here tonight.”

“I think it’s just yet another indication of Taiwan’s commitment to the U.S.-Taiwan economic relationship,” said William Brent Christensen, Director of American Institute in Taiwan’s Taipei Office.

Recently, the U.S.-China trade frictions have intensified. John Deng, head of the Taiwan delegation and Minister without Portfolio said that Taiwanese companies are reorganizing their global supply chains—and some production lines have to leave the mainland. Many are returning to Taiwan. Some are turning to Southeast Asia, and some are investing in the United States.

“The business community now generally believes that we need to get close to the market, and the global market is still the United States,” Deng said. “I believe that the whole situation is still changing. There may be more Taiwan enterprises going to invest in the United States.”

Recently, the United States put Huawei and its affiliates on its Entity List. Many big chip makers and semiconductor manufacturers stopped supplying Huawei. However, TSMC still accepts large orders from Huawei, which raised public concern.

“Our business community is very clear about these regulations,” Deng said. “We will also work with our business community in this process. One of the most important principles: we absolutely cannot violate U.S. regulations … I believe that our business community also understands this.”

On June 12, under the witness of two U.S. Senators and one Congressman, the Taiwan Power Company and GE Gas Power signed a contract for Datan Units 8 & 9 combined cycle power plant expansion project. The total contract amounts to $1.2 billion, and the power generation capacity will be 2.2 million kilowatts.

John Rice, Chairman of GE Gas Power said, “Infrastructure, power generation, is a fundamental building block for economic development and growth. And so, the role that we have to play is very important.”

Wei-Fuu Yang, Chairman of Taiwan Power Company said, “These two units will join our power supply in the year of 2022 and 2023. This will also satisfy the increased demand for power in the near future by our Taiwanese business once they return from the mainland.”