Leading Taiwanese technology firms are actively considering shifting their manufacturing bases from China to countries like India as a strategic move to reduce their exposure to the Chinese market. Against the backdrop of increasingly tense relations between Taiwan and China, top policymakers in the Taiwanese government have emphasized the potential for collaboration between Taipei and New Delhi in crucial sectors such as semiconductor manufacturing and electronic equipment production.

Taiwanese Tech Giants Eye India for Supply Chain Strengthening

Deputy Minister for Taiwan’s National Development, Kao Shien-Quey, highlighted the significant scope for collaboration between India and Taiwan in emerging and critical technologies, particularly in the manufacturing of semiconductors and electronics equipment. In discussions with international journalists, she revealed that major Taiwanese technology giants are viewing India as a key destination to fortify their global supply chains.

Decoupling from China: Taiwanese Companies Seek Diversification

Kristy Tsun-tzu Hsu, Director at the Taiwan ASEAN Studies Center, emphasized India’s importance to Taiwan, noting that Taiwanese companies operating in China are exploring options for “decoupling” from the global supply chain with a focus on the Chinese market. As tensions between China and Taiwan escalate and with Washington’s trade dispute with Beijing, leading Taiwanese firms are increasingly considering relocating their production bases from China to countries such as India, Europe, North America, and the United States.

Growing Interest in India: A Potential Manufacturing Hub

The strained relationship between China and Taiwan, further heightened by the visit of US House Speaker Nancy Pelosi to Taiwan last year, has prompted Taiwanese companies to seek alternative manufacturing destinations. India has emerged as a favorable choice due to its desire to attract leading Taiwanese chip producers, including Taiwan Semiconductor Manufacturing Corporation (TSMC), the world’s largest chipmaker with clients like Apple.

Collaboration Opportunities in Semiconductor Manufacturing

With the ongoing global supply chain restructuring and the “China plus one” strategy gaining traction, there is a growing expectation of enhanced collaboration between India and Taiwan in the semiconductor and information and communication industries. Deputy Minister Kao Shien-Quey expressed confidence in the acceleration of partnerships, leveraging India’s significant software capabilities and Taiwan’s strength in hardware and manufacturing in the ICT sector. India’s large domestic market adds to the appeal for investment and collaboration.

New Production Bases and Trade Deal Aspirations

Negotiations are underway for Taiwanese semiconductor companies to establish manufacturing facilities in India. Talks regarding the setup of production bases for Taiwanese companies in two exclusive industrial parks in India are in the final stages. The Taiwanese government has been actively pursuing a trade deal with India to expand the trade basket and enhance economic ties between the two nations.

India’s Growing Trade Relations with Taiwan

Taiwan-based Foxconn, Apple’s largest supplier, already operates an iPhone manufacturing facility in Tamil Nadu and is setting up another facility in Karnataka. The bilateral trade between India and Taiwan has witnessed significant growth, increasing from USD 2 billion in 2006 to USD 8.9 billion in 2021. The expansion of Foxconn’s operations in India serves as an example, encouraging more technology companies to invest in the country.

India-Taiwan Relations: Beyond Trade and Investment

Although India does not have formal diplomatic ties with Taiwan, both countries share trade and people-to-people relations. In recent times, some experts in India have advocated for stronger ties with Taiwan, particularly in the trade and investment sectors, following the border dispute with China in eastern Ladakh.

As tensions persist between China and Taiwan, Taiwanese technology firms are actively diversifying their manufacturing bases, with India emerging as a promising destination. The collaboration between India and Taiwan in emerging technologies and the strategic shift of Taiwanese companies to India’s manufacturing sector signal the growing importance of the India-Taiwan partnership in the evolving global supply chain dynamics.