Taiwan: Production Moves to Cheaper Destination

Cable assembly companies in Taiwan are focusing on relatively newer product lines such as DVI, USB and IEEE 1394(b). Given the manpower demands in the cable assembly process, most makers have set up plants in mainland China to handle the traditional large volume business for cables targeted at the consumer electronics industry. However, the need for greater R&D and the close relationships with the large number of IT manufacturers have caused most makers to set up dual production facilities: on the mainland for cost-effective volume business, and on the island for technology-sensitive cables or cable combos.



The Taiwan manufacturing segment can broadly be classified into three categories: PC-related, fiber optic and RF. Of these, the newer PC categories such as IEEE 1394b and USB 2.0 and PCI Express are seeing a strong growth in demand. As these products are relatively new, Taiwan makers find they have an advantage in producing these on the island. Makers in mainland China still focus on standard cable types. RF cables are also strong with many makers getting contracts from cellphone makers. Fiber optic cables remain in the doldrums. Unlike the market in Korea where makers are capitalizing on demand for fiber-to-the-home, Taiwan companies see demand continuing to fall as companies in mainland China ramp up fiber production lines.



According to a spokesman at cable assembly material provider Sunf Pu, “Material demand for manufacturing high speed interfaces such as DVI cables, USB cables, and IEEE 1394 is soaring. As computing devices gain more acceptance in the mainstream A/V segment, we expect demand for the highbandwidth cables to surge.” Hong-I Chen, general manager of Advanced Connectek, feels the growth is in RF coaxial cables. According to him, “This product will rise sharply due to the growth in demand of portable products such as smart phones.”



On the issue of price, most makers have had to deal with a great deal of volatility in the cost of raw materials, especially plastics. The constantly increasing price of oil has caused a steep increase in the cost of raw materials. However, the high cost of labor has been offset by by moving the critical elements of production involving labor to mainland China. According to a spokesman for Sinbon, the company has been able to increase profits after moving their production to mainland China. The company says that it produces more at their factory in mainland China than it does in Taiwan.