By Francesco Guarascio, Khanh Vu and Ben Blanchard
HANOI/TAIPEI (Reuters) – Elon Musk’s SpaceX has asked its Taiwanese suppliers to shift production off the island, leading to parts of their supply chain being relocated, according to employee and close sources equipment manufacturers and company documents.
A source at a company that is one of several contractors supplying components for SpaceX’s Starlink satellite internet products said SpaceX had asked its manufacturers to produce outside Taiwan due to geopolitical risks. , pushing at least one of them to move its production to Vietnam.
A second source who works with Taiwanese satellite component makers on the island said SpaceX has directly asked suppliers to shift manufacturing overseas.
Chin-Poon Industrial, a maker of satellite components that recently said it was a supplier to SpaceX, told Reuters the U.S. company had asked it to move its manufacturing from Taiwan to Thailand for new orders “mainly due to geopolitical considerations. It was not specified.
The sources declined to be identified because the information was not public. SpaceX did not respond to requests for comment.
SpaceX’s demands put renewed focus on Elon Musk’s controversial relationship with Taiwan, particularly after he declared last year that the country was an integral part of China, drawing heavy criticism from the government Taiwanese.
China considers democratically governed Taiwan its own territory and has held almost daily military exercises around it for the past five years and has never given up on taking the island by force. Taiwan rejects China’s sovereignty claims.
Chinese exercises have intensified since 2022, with the latest war drills conducted last month replicating a blockade of the island. Facing the risk of devastating disruptions to their supply chains, some Taiwanese companies in the strategic satellite and semiconductor sectors are taking steps to reduce their reliance on domestic manufacturing.
A Vietnam-based investment adviser told Reuters in October that SpaceX representatives said in a private meeting in March 2023 that the company was interested in establishing a satellite equipment manufacturing center in Vietnam and had requested advice on the protection of intellectual property.
Contacted by Reuters about SpaceX’s Taiwanese suppliers moving overseas, Taiwan’s Ministry of Economy responded: “Short-term political factors are not expected to affect the supply chain relationship between international companies satellites and Taiwanese manufacturers. »
EXPANSION OF VIETNAM
Taiwanese SpaceX supplier Wistron NeWeb Corporation (WNC) began producing routers and other networking equipment for Starlink this year at its factory in the North Vietnamese province of Hanam, about an hour south of Hanoi, reports said. said two of the factory’s employees and a contractor.
WNC’s expansion in Vietnam is largely due to orders from SpaceX, one of the workers said.
The Hanam factory plans to at least double its 3,000 workforce, the entrepreneur and one of the workers said. Outside the factory, several banners advertised job openings at the factory, Reuters journalists observed in mid-October.
The first source aware of SpaceX’s requests to leave Taiwan is an employee of a Vietnam-based foreign supplier whose components for circuit boards are in Starlink’s ground equipment via components manufactured by WNC.
The source said a SpaceX supplier they work with that supplies WNC was directly invited by SpaceX to produce off-island.
WNC declined to comment, citing customer confidentiality. Its latest annual report in April said: “In the face of geopolitical risks and evolving customer requirements, WNC has continued to expand its global manufacturing capabilities.”
Universal Microwave Technology, another supplier and manufacturer of satellite components to SpaceX, invested in a factory in Vietnam this year, according to a Taiwanese official and public company documents.
Universal Microwave Technology declined to comment on individual customers, citing confidentiality agreements, but said it was expanding its presence in Southeast Asia, including opening new factories in Thailand and Vietnam.
“Planning overseas production capacity will help customers reduce their doubts about geographic risks, win customer recognition and increase the scope of cooperation with customers,” he said. .
Taiwan has a large satellite industry, with about 50 companies producing ground equipment and sensitive components, according to data from the Ministry of Economy and Industry. The government estimates that the sector’s output exceeded NT$200 billion ($6.23 billion) last year.
SpaceX has about a dozen direct suppliers from Taiwan, which rely on dozens of domestic suppliers, said the source who works with the island’s satellite industry.
The Vietnamese government said in September that SpaceX wanted to invest $1.5 billion in the country, although the actual timeline and goals of the investments remain unclear.
Shenmao Technology, a supplier of solder materials for printed circuit boards, which has supplied components to SpaceX, announced in April that it would spend $5 million to establish a unit in Vietnam, without specifying who its customers would be for the products from this factory. The company did not respond to a request for comment.
(Reporting by Francesco Guarascio and Khanh Vu in Hanoi and Hanam and Ben Blanchard in Taipei; additional reporting by Phuong Nguyen in Hanoi; editing by Gerry Doyle and Christian Schmollinger)
