Tag: Taiwan

OM in the News: Technology Supply Chains and the Shift From China

Rising costs, geopolitical tensions, and trade disruptions are causing tech giants like Apple, Samsung, Dell, and Nokia  to find suppliers at new locations across Asia, reports Material Handling & Logistics (June 19, 2025).

India, Malaysia, Thailand, Vietnam, and Taiwan have emerged as the most prominent alternative suppliers to China for the technology industry, despite Taiwan’s own geopolitical challenges.

The products most affected by these diversification strategies include smartphones, smart watches, computers, and laptops, representing core product lines for the world’s leading technology manufacturers.

Despite the rhetoric in support of nearshoring that was born out of the pandemic, U.S. companies like Apple have kept the largest share of their suppliers in Asia. This is because of the comparative advantage that exists in countries like India, Malaysia, Thailand, Vietnam, and Taiwan.

Here are the regional advantages of each:

India: Offers a large domestic workforce skilled in smartphone and laptop manufacturing at a fraction of the labor cost. The country has rapidly developed its technology manufacturing capabilities, particularly in smartphone assembly, where it has become a major production hub for both Samsung and Apple devices. India’s combination of technical expertise, lower wages, and massive domestic market makes it particularly attractive for technology companies.

Malaysia: Has well-established infrastructure and a low-cost workforce skilled in the back-end processes of semiconductor manufacturing. Malaysia has developed specialized expertise in semiconductor packaging and testing, making it a critical node in the global chip supply chain. The country’s established technology parks and government support for high-tech manufacturing have created a conducive environment for technology suppliers.

Vietnam & Thailand: Government incentives, including tax breaks for technology companies and funding for new facilities, have fostered an innovative environment for new suppliers. Vietnam has emerged as a particularly important alternative for smartphone and laptop manufacturing, while  Thailand has developed strengths in smartwatch and computer production. Both countries have benefited from their proximity to China’s supply ecosystem while offering lower costs and reduced geopolitical risk.

Taiwan: Taiwan is becoming increasingly prominent in the global computer parts supply chain. Taiwan’s world-leading semiconductor industry, centered around TSMC, gives it a unique and difficult-to-replicate advantage in high-end electronics manufacturing. The country’s technical expertise and established ecosystem for advanced electronics production make it an essential partner for many technology companies.

Classroom discussion questions:

  1. Does this article conflict with the the fact that reshoring continues to add jobs in the U.S.?
  2. What do these 5 countries have in common?

OM in the News: Taiwan, Chips, and Global Supply Lines

“If anyone hits Taiwan, or there is a serious disruption . . . the tech and electronics industry worldwide is basically screwed,” says the founder of chip provider MA-tek in Financial Times (June 1, 2023). Taiwan is best known for making cutting-edge semiconductors. But its companies also turn out other crucial components from printed circuit boards to advanced camera lenses and they run huge device assembly operations in China. This has created a triangle of critical interdependence between Taiwan, China and the US that has deepened even as tensions have risen.

iPhone 12 Pro Costs Around $406 to Make

To understand, let’s look at the iPhone. It is one of the most successful consumer devices of all time: 2.4 billion sold since its launch in 2007, racking up over $1 trillion in revenue for Apple. Its success rests on a sprawling Asian supply chain producing chips, displays, speakers and more on an almost unimaginable scale. At its heart lie both mainland China and Taiwan. Each iPhone needs some 1,500 different components. Nearly 70 per cent of Apple’s top suppliers, making everything from processors to casings, are based in either China (26%), Taiwan (23%) or the US (18%).

The most valuable components — including core processors, 5G modems, Wi-Fi chips, and premium camera lenses — are made inTaiwan. All told, the island’s suppliers account for nearly $200 of the total materials bill for each iPhone. These chips, however, are designed by Apple, or otherU.S., Japanese or European chip developers, such as Qualcomm, Sony, and Bosch.

Chinese suppliers are concentrated in less technologically demanding areas, like product assembly and mechanical parts. The number of China-based suppliers has overtaken all other countries to become the largest source over the past few years. They have also started to move up the supply chain, and now make some of the advanced OLED screens for iPhones. China is also where 95% of all iPhones are assembled, a figure that has changed little since its launch. The country is a major market for Apple, too, providing 1/5 of its total annual revenue. Complicating the picture is the fact that many Taiwanese and U.S. suppliers serve Apple from hundreds of facilities in mainland China.

Without any of these components, an iPhone would not be an iPhone. But a formula that has worked for 15 years is being put to the test as geopolitical tensions rewrite the rules of tech manufacturing.

Classroom discussion questions:

  1. Western nations this month vowed to “reduce excessive dependencies in our critical supply chains.”   How can they do this?
  2. What has brought this supply chain issue to a head?