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

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.

The agreements come at a time of historically high tensions between mainland China on one side and the United States and Taiwan on the other. Caught in the middle are some of Taiwan’s biggest firms, especially manufacturers of the fiendishly complex semiconductors at the heart of the modern economy.

Both powers are keen to curry favour with Taiwan’s tech titans, but strained relations between Beijing and Washington, cross-Strait tensions and America’s high manufacturing costs are pushing Tawainese companies in new directions.

Many are retaining basic exposure to mainland China – a juicy source of sales revenue during non-pandemic times – while shipping hi-tech components to the US from American-friendly countries to avoid the costs of doing business in the US itself.

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.

“For some years it seems that it’s no longer so attractive for Taiwanese companies to plan on putting their money, technologies and managerial expertise into [China], and now it looks like India has become their ‘plan B’,” said John Eastwood, a partner with Eiger law firm in Taipei.