Keyboard, video and mouse switch manufacturer Aten International Co (宏正自動科技) yesterday said it is considering relocating production to Southeast Asia amid a US-China trade dispute.
“While there appears to be a ceasefire between the US and China at the moment, we cannot be sure that they will settle their issues any time soon,” Aten chief financial officer Alex Chen (陳健南) said at a luncheon meeting in Taipei, adding that market uncertainty continues to dampen the company’s sales in the US.
The US and China reached a “phase one” trade deal two weeks ago, but Washington still maintains 25 percent tariffs on US$250 billion of China-made goods, including electronics.
Photo: Natasha Li, Taipei Times
With those tariffs continuing to affect profits, the company has set its sights on moving labor-intensive production lines from its plant in Shenzhen, China, to a Southeast Asian nation, which could save up to 10 percent on labor costs alone, Chen said.
Aten’s Shenzhen plant contributes 60 percent of its overall production, while its plant in New Taipei City’s Sijhih District (汐止) contributes 40 percent, he said.
Chen did not reveal specific details, but said it would not consider Vietnam, where many of its industry peers have relocated.
“The US is growing more suspicious of companies avoiding tariffs by simply assembling or processing their products in Vietnam... We would not want to face even more tariffs by moving there,” he said.
Aten aims to make the move by the end of next year and plans to begin production by 2021, he said.
Chen offered an upbeat outlook for next year, with sales expected to regain momentum in Asia.
“With the 2020 Summer Olympics coming up in Tokyo, we are facing strong demand in Japan,” Chen said, adding that the firm has secured large orders in the Chinese financial sector.
Order visibility for Asia, which contributes about 47 percent of the company’s overall revenue, extends to the first quarter next year, he said.
Aten’s sales in the US, which contributes about 28 percent of revenue, are expected to remain flat, as companies remain reluctant to invest, Chen said.
However, there is still healthy demand elsewhere, with Russia driving up sales, he said.
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