Research Insights: Taiwan-based IPC suppliers expand in Southeast and South Asia

In recent years, Taiwan-based IPC (Industrial PC) manufacturers have accelerated their production diversification, driven by geopolitical factors and local manufacturing incentive policies.

According to DIGITIMES Research, revenue from Europe for Taiwan-based IPC manufacturers grew 8.7% in 2023 compared to the previous year, marking the highest growth rate across all regions. Meanwhile, Southeast and South Asia are increasingly recognized as IPC manufacturers' next key strategic production hubs.

Some IPC manufacturers indicated that customers express concerns about "Made in China" and even "Made in Taiwan" products, prompting calls to establish overseas bases. Beginning as early as 2020, IPC manufacturers adjusted their production capacity in China. Over the past two years, alongside expanding capacity in Taiwan, they have also established overseas manufacturing bases to cater to cross-regional customer demands.

Revenue in the Americas has been bolstered by the stabilization and recovery of the US economy and the initiation of major public infrastructure projects. In 2023, revenue reached TWD903.5 billion, constituting 32.8% of the total revenue.

Encouraged by the US government's push for local manufacturing, IPC manufacturers have been expanding their production capacity in the US. Leading IPC firms like Advantech, as well as network security IPC companies such as Lanner Electronics and Ibase Technology, have all outlined plans for factory establishment and expansion post-2023.

Furthermore, the manufacturing markets in Southeast Asia and India have seen significant growth recently. Thanks in part to the relatively lower labor costs, many tech companies have set up manufacturing bases in Southeast Asia, driving local IPC demand.

IPC manufacturers have proactively executed their diversification strategies in Southeast and South Asia. Advantech, for instance, is ramping up its presence in India while negotiating with OEM partners across Southeast Asia.

Ennoconn, along with its parent group Foxconn, has set up operations in Malaysia and Vietnam, intending to establish an integrated manufacturing hub in Southeast Asia. Similarly, DFI, in partnership with its parent group Qisda Corporation, has implemented flexible production at its Vietnam facility to cater to customer demands beyond China and Taiwan.

DIGITIMES Research notes that IPC manufacturers adjust their production capacity, adapting to the changing production of their parent companies' overseas facilities or by directly acquiring local operations through acquisitions. For example, Ennoconn's acquisition of NCR's Budapest plant exemplifies IPC manufacturers' strategy of expanding their overseas capacity through acquisitions. As a result, the expansion of overseas production bases is anticipated to emerge as a crucial factor driving major acquisitions among IPC manufacturers.

Note 1: The statistics include locations with manufacturing and assembly line capacity but do not include cases that are only in the stage of intending to invest in establishing a plant.
Note 2: Tier 1 companies had revenues exceeding TWD50 billion in 2023, Tier 2 companies earned between TWD10 billion and NT$50 billion, while Tier 3 companies had revenues below TWD10 billion.
*Advantech is expanding its existing operational center in India, which includes assembly lines and a maintenance service center.
**This does not include Advantech's newly launched location in Malaysia and its headquarters under construction in California, which are planning to introduce assembly lines in the future.
Source: DIGITIMES Research, April 2024