SpaceX asks Taiwanese suppliers to move manufacturing abroad

SpaceX asked Taiwanese suppliers to shift manufacturing off the island, resulting in some relocating parts of their supply chain to Southeast Asian countries, sources told Reuters.

Geopolitical risks were cited as one of the major reasons for these requests by Elon Musk’s company.

Some Taiwanese suppliers have already moved to places like Vietnam and Thailand. 

Musk had said last year that Taiwan is an “integral part” of China, triggering criticism from the Taiwanese government. 

With China increasing military drills around Taiwan, some Taiwanese semiconductor and satellite firms are taking steps to decrease their dependence on domestic manufacturing.  

 “Short-term political factors should not affect the supply chain relationship between international satellite companies and Taiwan manufacturers,” Taiwan’s economy ministry told Reuters. 

Taiwanese SpaceX supplier Wistron NeWeb Corporation (WNC) has reportedly started producing routers and other network gear for Starlink at its northern Vietnamese factory.

WNC’s expansion in Vietnam is mainly due to orders from SpaceX. 

Similarly, SpaceX supplier Universal Microwave Technology has also invested in a factory in Vietnam, sources told Reuters.  

“The planning of overseas production capacity will help customers reduce their doubts about geographical risks, gain customer recognition, and increase the breadth of cooperation with customers,” Universal Microwave Technology told Reuters.

Taiwan’s satellite industry comprises around 50 companies, with the sector’s output exceeding USD 6.2 billion, according to government estimates. 

SpaceX has about a dozen direct suppliers from Taiwan that rely on domestic vendors, sources told Reuters. 

Shenmao Technology, which supplies materials for PCBs and has been a provider of components to SpaceX, announced in April that it would set up a unit in Vietnam.