4 days ago
Electronics firms now gaze overseas
The electronics sector, which employs roughly 600,000 people, has started to freeze hiring and study partial manufacturing relocation to countries with lower costs and higher production efficiency than Thailand, in a bid to minimise the impact of US tariffs, says the Electronics & Computer Employers Association.
Sampan Silapanad, president of the association, said while electronics manufacturers are unlikely to completely pull out of Thailand, partial manufacturing relocation is possible, especially for companies that already have production facilities in several countries, giving them more flexibility.
While the US tariff rate for Thai goods is 19%, on par with other Southeast Asian economies, production efficiency in Thailand is less competitive than regional peers, especially Malaysia and Vietnam, he said.
"There are also increasing uncertainties in the global trade landscape, with the US threatening to raise tariffs on foreign computer chips. While they wait for the dust to settle, companies have begun to freeze hiring and focus on cost cutting as much as possible," Mr Sampan told the Bangkok Post.
Demand for consumer electronics has fallen as tariffs are set to increase prices of imports in the US, he said.
Speaking after a meeting with Apple chief executive Tim Cook, US President Donald Trump said he would impose a 100% tariff on foreign computer chips, exempting only companies that have invested or committed to invest in US manufacturing.
Taiwan Semiconductor Manufacturing Company, the world's largest contract producer of chips, and Nvidia, one of the largest chip makers in the US, would likely be exempt from the tariff.
Yet the plan could harm other economies in Asia, with a new 100% tariff on foreign computer chips applying to most countries and companies.
"This situation has made the outlook fragile for electronics manufacturers, particular small and medium-sized enterprises [SMEs]," said Mr Sampan, adding the industry's export outlook this year is being updated after heavy frontloading during the first six months.
