Asus Shifts Production to Southeast Asia Amidst U.S.-China Trade Tensions
TAIPEI, Taiwan - August 14, 2023 – Asus, a leading PC and electronics manufacturer, has significantly moved its production base for U.S.-bound products to Southeast Asia in response to ongoing tariffs on goods imported from China, the company revealed during its Q2 2023 earnings call on August 13th. The shift aims to mitigate the financial impact of the 30% tariffs currently levied on many U.S. imports from China.According to CFO Nick Wu, over 90% of Asus’ motherboard and PC production has now been relocated to Thailand, Vietnam, and Indonesia. This transition involved collaboration with electronics manufacturing services partners to ”adjust production site allocation and invest in capacity realignment” over recent quarters.
While current tariffs primarily effect steel and aluminum components – representing a small portion of Asus’ product portfolio – the company is closely monitoring potential tariffs on semiconductors. Wu noted that moast of Asus’ products currently benefit from exemptions on the U.S.-China tariff list. The White house launched a Section 232 inquiry in April to assess the national security implications of semiconductor imports.
Asus anticipates evaluating the cost of finalized tariffs in the new production locations and determining whether to pass those costs onto consumers or distribution channels. “But how much of that can be passed on depends on relative bargaining positions we have with suppliers and distributors, which is another matter altogether,” Wu stated.
The company’s investments to mitigate tariff impacts during the quarter ending June 30th resulted in a 0.5 percentage point reduction in its operating margin, alongside headwinds from a strong Taiwan dollar against the U.S. dollar.
Despite these challenges, Asus co-CEO S.Y. Hsu expressed confidence in the company’s ability to navigate the situation. “While tariffs and exchange rates do create headwinds for our industry, Asus can effectively mitigate these impacts through product innovation, diversified market presence and flexible configuration of our supply chain and production bases,” Hsu said.
Asus’ move follows similar actions by other major computer manufacturers like HP, which expects less than 10% of its North America-bound PCs and printers to be made in China by September, and Apple, which plans to invest $600 billion to expand its domestic supply chain. The trend reflects a broader industry effort to diversify manufacturing locations and reduce reliance on China amid escalating trade tensions.
