Prediction Two of the Ferrari Consulting and Research Group’s 2020 Predictions for Industry and Global Supply Chains indicates that continued levels of global supply network management challenges, especially centered on components and products produced in China, will continue to lead to ongoing structural sourcing shifts during 2020-2021.
Further evidence of such trends has once again become visible.
Nikkei Asia Tech reported this week (Paid subscription or metered monthly complimentary view) that Taiwan based Pegatron, the globe’s second-largest contract manufacturing service provider plans to have new production facilities up and running in Indonesia and Vietnam by the end of this year.
Readers will likely recall that in addition to Foxconn Technology (Ho Hai Precision Corp.). Pegatron provides production services for Apple products including lower-cost versions of iPhones.
According to the report, the aim of these latest moves comes from client demand to move production away from the company’s production facilities in China, where operating costs and trade risks are rising. The report indicates that the new Indonesian and Vietnamese facilities will produce devices for Internet connectivity.
Pegatron’s Chairman told the publication that China: “has not been an optimum manufacturing location since more than five years ago,” with the advent of escalating trade tensions among the United States and China.
This new effort is part of a strategic initiative to both expand manufacturing domestic production capability within Taiwan and in diversifying among other Asian and Asia-Pacific areas. This far, Pegatron has not elected to locate in India, reportedly because existing customers have not indicated a desire to do so at this time.