Taiwan’s Pegatron to raise domestic output to avoid higher U.S. tariffs on China exports

29, May. 2019

TAIPEI, NNA – Taiwan’s Pegatron Corp., the world’s second-largest electronics contractor, is expanding domestic production capacity to minimize the impact of higher U.S. tariffs on exports from China.

The Ministry of Economic Affairs on Friday approved investment plans totaling 22.1 billion New Taiwan dollars ($703 million) by six Taiwanese firms including Pegatron, one of the top 10 Taiwanese companies exporting from China.

Rechi Precision Co, Taiwan’s largest compressor maker, and information technology equipment maker, Adlink Technology Inc., also plan to increase domestic output, with government fiscal support.

Pegatron will spend NT$14.9 billion to buy a factory in New Taipei City to install production lines for value-added products such as sensors for the Internet of Things, and upgrade a research center in Guandu, suburban Taipei, the ministry said in a statement.

Pegatron, ranked second after Hon Hai Precision Industry Co., will also add production lines and automation equipment at its two plants in Taoyuan City, according to the ministry.

Under a three-year program adopted in January, the government is encouraging Taiwanese firms operating overseas to move their production capacity home with tax breaks and streamlined red tape as the U.S.-China trade row intensifies.

U.S. President Donald Trump earlier this month raised tariffs on Chinese imports from 10 percent to 25 percent on $200 billion worth of goods, effective at the end of June.

Taiwan has lured back 61 firms with a total of NT$310 billion approved capital inflows to create 30,100 jobs, the ministry said.

The government had initially expected to attract NT$200 billion for such investment for all of 2019, but now foresees the figure will top NT$600 billion by year-end, according to local media reports.