Driven by US-China trade war, Taiwan-based Inventec expands production capacity in Juarez
Inventec Corp., a Taiwan-based manufacturer of computers, servers and mobile devices with operations in Ciudad Juarez, said it plans to shift its labor-intensive module assembling business from China to Taiwan, Malaysia and Mexico in order to cope with the intensifying trade war between China and the United States.
“The trade war is the biggest risk facing the electronics industry this year, undermining capacity expansion plans in Shanghai and other cities in China,” said David Ho, CEO of Inventec’s Appliance division, during the third quarter conference call.
“The company expects 10% of its revenue to be affected by the US$ 250 billion tariff list,” the official said in reference to the 10% tariffs on US$ 250 billion-worth Chinese products recently announced by U.S. President Donald Trump.
“We are comfortable. However, we are more concerned about the next round of U.S. tariffs, which could include almost all goods made in China,” Ho added. “We want to do everything we can to help reduce costs for our clients.”
Inventec Appliances manufactures mobile devices —including some Apple branded products—, servers and notebooks. “If Apple products were not exempted from US tariffs, the impact would have been as high as 90%,” Ho said.
President Trump has said the tariffs would increase to 25% on starting 2019, to avoid the hike, Inventec plans to expand mobile devices output capacity in Taiwan and Malaysia, while also considering assembling notebook computers and server modules at its Mexico plant, the official said.
Last year, the facility in Ciudad Juarez increased its production capacity from 35,000 to 42,000 servers per month.
Despite record revenue of US$ 4.57 billion in the last quarter, Inventec’s net profit dropped 32% to US$ 51.2 million from US$ 75.5 million in the same period of 2017 mainly to a foreign-exchange loss of US$ 16.3 million as the Chinese yuan fell 4% against the U.S. dollar in the quarter.
Notebook computers provided the largest chunk of the company’s last quarter revenue with a 45% share, while servers accounted for 36% and smart devices made up 18%, the company said.