The shift of supply chains out of China appears to be accelerating and the scale can be called a “megatrend.” At a recent conference of a Tier-1 EMS, we heard senior management speak about their efforts to find non-China suppliers for cables, metals, castings, plastics, buss bars, fans, power supplies, etc. – basically everything. They are clearly struggling to find quality suppliers that can match the cost and efficiencies of Chinese suppliers. One VP admitted Chinese suppliers are unmatched in quality, speed, automation, problem-solving skills, and work-ethics. There is realization that costs in China will continue to be the lowest, but firms must have a “China+1” strategy for risk mitigation. Supply chains in China has developed over the past 20 to 30 years, and it will take at least 10 years for comparably mature supply chains to be developed elsewhere.
Looking at PCB makers in particular, many manufacturers are investing in new factories in Thailand. Board shops in China will increasing focus on higher technology products as low-end PCB’s move first to SE Asia. We foresee increasing flow of capital and talent towards SE Asia to support this trend. Some companies have even started training their staff to speak the Thai language! Other countries that will benefit include Malaysia, Vietnam, Indonesia, the Philippines, and India.
Sunshine PCB has selected Penang Malaysia as the site of our future manufacturing center in SE Asia. Sunshine has acquired 20 acres of land and a large factory with state-of-the-art capabilities and automation is slated for end of 2026. In April of 2023, we acquired an existing PCB shop and this plant continues to ship product today. In the past year, Sunshine has invested heavily in the upgrade of the 30,000 sq.ft. facility and its equipment. The existing facility of Sunshine PCB (Penang) Sdn Bhd is located in the Perai district on the mainland and is currently open for visits, audits and transfer orders from China. Please contact us for more information.
Anxious US customers have asked us about tariffs and what to expect for next year. We know the current exclusion for 2L and 4L boards are set to expire in May 2025. We hope these will be extended but we are concerned the extension may not be granted. There is also a potential for the tariff rate on PCB imported from China to increase from 25% to 35%. Frankly, these are conjecture and we do not know what will happen. We are monitoring the USTR website and we will work with our customers to deal with any changes.
If you are concerned about the tariffs increasing next year, we suggest (1) purchase your PCB needs based on forecast and carry more inventory, (2) consider qualifying Sunshine Malaysia and get your parts tooled there ahead of any changes, even if the cost is slightly higher.