SpaceX urges Taiwanese suppliers to relocate amid geopolitical concerns
What's the story
SpaceX, the American aerospace manufacturer helmed by Elon Musk, has urged its Taiwanese suppliers to move their manufacturing operations out of Taiwan. The move comes amid fears of supply chain disruptions amid regional tensions. Consequently, at least one supplier has already moved its operations off the island. SpaceX's request underscores the geopolitical sensitivities surrounding Taiwan and their implications on global supply chains.
Supplier shift
Suppliers confirm relocation request
A supplier that manufactures components for SpaceX's Starlink internet satellites has confirmed to Reuters the company's request to move out of Taiwan. One subcontractor has shifted its operations to Vietnam. Chin-Poon Industrial, another SpaceX supplier, was asked to shift its production from Taiwan to Thailand amid similar geopolitical concerns. By chosing less politically volatile regions, SpaceX's aims to ensure production stability.
Geopolitical backdrop
Musk's Taiwan remarks and China's military exercises
SpaceX's request to Taiwanese suppliers comes after Musk's controversial statement last year when he called Taiwan an "integral part" of China. The comment was criticized by the Taiwanese government and underscored the sensitive nature of SpaceX's dealings with Taiwan. Meanwhile, China has been ramping up its military exercises around Taiwan since 2022, further fueling regional tensions.
Diversification drive
Taiwanese firms diversify amid supply chain concerns
Amid the rising tensions and possible supply chain disruptions, several Taiwanese companies in key sectors such as satellite and semiconductor production are scaling back their reliance on domestic manufacturing. The goal is to avoid possible supply chain setbacks. Reports suggest that Vietnam is being eyed as a new production hub by SpaceX, which had already started talks to set up manufacturing facilities there earlier this year.
Production shift
WNC begins production at Vietnamese facility
Wistron NeWeb Corporation (WNC), a SpaceX supplier, has begun manufacturing Starlink routers and network gear at its Hanam facility in Vietnam. To meet growing demand, WNC plans to double its workforce, as seen from recruitment banners at the factory. Other SpaceX suppliers such as Universal Microwave Technology have also invested in Vietnam, establishing new factories in Southeast Asia to alleviate customer concerns over geopolitical risks.