Global Supply Chain Shock Opens New Space for U.S.-Taiwan Business Relations

Taiwanese manufacturers have long been an important part of the global supply chains of U.S. brands from Apple to Gap. Supply chain pressures from China’s Covid-19 lockdown, heightened military tensions between Beijing and Taipei and changes in U.S. technology policy toward the mainland are opening the door to new and deeper collaborations, a senior U.S. business representative in China said.

New manufacturing projects in the U.S. by major companies such as iPhone maker Hon Hai Precision Industry Co. and Apple Inc. and chipmaker TSMC give its suppliers room to invest in the U.S., Andrew Wylegala, president of the American Chamber of Commerce in Taiwan, said in an interview Saturday.


By doing so, they will follow their customers, reduce political risk and address Taiwan’s bottlenecks, such as limited land supply and chronic power shortages, said Wylegala, who worked in Asia for nearly 15 years before joining AmCham Taiwan. 2021.

“External shocks such as Covid have disrupted Taiwan and there is a new risk premium for firms,” ​​Wylegala said. “Perhaps this is an opportunity for Taiwan to introduce some of its own sabotage by expanding overseas investment”; he said it would find a coveted and complementary partner in the US.

The close commercial relationship between the United States and Taiwan is not well recognized, Wylegala said. “I don’t think it gets enough attention and trust because of how solid and mutually beneficial and profitable it is,” he said. Taiwan is the No. 11 trading partner of the United States and the 8th commodity export market for example.


“This is a strong relationship in trade and investment, technology and strategic partnerships, and the fundamental advantages Taiwan offers in economic freedom, the rule of law, and a vibrant democracy. Despite the global recession, supply chain disruptions, and cross-Strait challenges, There’s still a lot of power and vitality.”

After President Donald Trump focused on China trade, the Biden administration gave a shot in the arm to Taiwan relations with the “US-Taiwan Initiative on the 21st”Yingshi-Century Trade” aims to drive business forward by improving 11 areas.


The boost is in line with optimism among U.S. companies about their economy. A survey released by the American Chamber of Commerce in Taiwan in January 2022 found that more than 87% of respondents expressed confidence in Taiwan’s economic growth in the next 12 months; 83% of respondents were optimistic about the prospects for the next three years. Additionally, a record 90 percent expressed some level of confidence in their organization’s prospects for revenue growth over the next 12 months; and 91 percent said they were very or somewhat confident about their prospects for the next three years.

While growth expectations have moderated as global interest rates rise, Taiwan’s 3 percent GDP growth forecast for this year is higher than many other countries, Wylegala said. “The fundamentals are still in place, which creates the prospect for us to get the most out of the bad macroeconomic and global conditions,” via Taiwan’s large tech competitiveness and ecosystem.

As far as the US is concerned, it needs to boost manufacturing, especially semiconductor manufacturing. The country is “trying to rebuild and create supply chains that the US has long since left or never existed,” he said. Taiwan’s strength has been complemented by the U.S. push to increase domestic chip production through initiatives such as the $52 billion CHIPS and Science Act. Among Taiwan-based semiconductor companies investing in the US, GlobalWafers will break ground on a new $5 billion fab in Texas on Thursday (see CEO interview here). Next week, TSMC will hold a “tool installation” ceremony at a new $12 billion factory in Arizona (see related post here).


Taiwan’s expansion in the U.S. would be “their style with some multinational leaders, not the Korean or Japanese model,” Wylegala said. Instead, he wants small and mid-sized companies focused on components and part of Taiwan’s larger local ecosystem to go after their biggest customers.

With more global investment and addressing some domestic bottlenecks, “Taiwan can come out very, very well,” he said. Given tensions with China, “Taiwan also faces constraints in terms of land, labour, water, talent, and the need to be closer to customers,” and global investment could be a solution.


“If the message gets through to governments and businesses, I see a real opportunity here,” Wylegala said. At a time of global stress, “the rest of the world is not sitting still.”

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