45TaiwanTechRethinksChina
These men created a
manufacturing boom.
Now they’re poised to pivotThirtyyearsago,Taiwanesetechentrepreneursstartedmovingfactoriestothe
mainland,kickingoffa globaleconomictransformationthat’smadeChinathe
world’stopmanufacturerofelectronics.Today,fourTaiwan-basedcompanies—
FoxconnTechnologyGroup,Inventec,QuantaComputer,andCompal—together
accountforsome40%ofexportsfromChinatotheU.S.ofcomputers,phones,
andrelateditems.ButfacedwithgrowingtradetensionsandU.S.tariffs,thelead-
ersofthosecompaniesarereconsideringtheircommitmenttoChina.Although
anypivotawayfromthecountryis juststarting,factoriesthatleavewon’tcome
backanytimesoon.Herearefourmenresponsiblefortheshiftdecadesago
whowillplaya keyrolein decidinghowmuchlongerChinawillremaintheglobal
manufacturingking.—DebbyWuSOLUTIONS Bloomberg Businessweek October 7, 2019
DivertedfromChina
DivertedfromtheU.S.Vietnam7.5%0.4%Taiwan1.9%0.2%Contribution to GDP from output diverted
by the U.S.-China trade war as of Q1 2019Terry Gou, 68,
founder
and board
member,
Foxconn
Technology
GroupYeh Kuo-I, 78,
founder
and board
member,
Inventec
Corp.Barry Lam, 70,
founder and
chairman,
Quanta
Computer Inc.Ray Chen, 70,
vice chairman,
Compal
Electronics
Inc.○ KEY PRODUCTS:
Apple iPhone, Amazon
Kindle, Google Pixel
○ SIGNS OF CHANGE:
Expanded Indian
manufacturing of
older-model iPhones;
building a plant in
WisconsinGou started out making knobs for black-and-white TVs, then connectors for
game-console maker Atari, then just about every gadget imaginable. Today,
Foxconn is the world’s biggest electronics contract manufacturer, with facilities
in more than 30 Chinese cities and in 14 other countries. Gou relinquished his
chairmanship this year for a failed bid for Taiwan’s presidency, but company
insiders say he remains the ultimate decision-maker at Foxconn. While the
company has faced criticism for its treatment of factory workers, Gou has
raised wages and improved working conditions. A promised facility in Wisconsin
praised by U.S. President Trump hasn’t yet opened, but the company says it will
build server components and device screens there.Chen has a mixed record in China: In 2018, Lenovo Group paid Compal
$257 million to unwind a joint venture the two founded in 2011. But a year earlier,
Compal lost more than $130 million when Chinese phone brand LeEco failed
to pay for handsets. Today, Compal is looking back home, with a new factory
in Taoyuan and expansion of a plant nearby. After Trump introduced his tariffs,
Compal began making networking gear in Vietnam, and the company says it may
add other products to its facilities there.○ KEY PRODUCTS:
HP and Dell laptops
○ SIGNS OF CHANGE:
Adding notebook-
manufacturing
capacity in Taiwan and
considering further
investments in VietnamLam was born in Shanghai, but his family fled to Hong Kong during the Chinese
civil war, and he studied in Taiwan. Although he was diagnosed with lung cancer
more than a decade ago, he’s still the public face of Quanta. Lam describes
the company as a turtle—patient and persistent—but it can strike fast when
necessary. He’s bought a factory adjacent to a Quanta facility in the northern
Taiwanese city of Taoyuan, where he’ll make what he calls “premium products”—
likely servers and high-end laptops. He’s also scouting locations in Southeast
Asia and expanding a 7-year-old data center business in the U.S.○ KEY PRODUCTS:
Apple MacBook, Apple
Watch, Amazon and
Google servers
○ SIGNS OF CHANGE:
Expanding capacity in
Taiwan and looking at
locations elsewhere
in AsiaYeh is a key backer of Taiwanese tech companies and has invested in businesses
from real estate to orchids. As the trade war intensified, an Inventec executive
said Yeh had offered to convert an orchid-growing facility in Vietnam into an
Inventec factory to skirt U.S. tariffs. While the comment was in jest, Inventec has
shifted some production of small appliances to Malaysia and has said it will move
manufacturing of U.S.-bound laptops to Taiwan.○ KEY PRODUCTS:
HP laptops, Apple
AirPods, Google servers
○SIGNS OF CHANGE:
Plansto move
production of laptops
forthe U.S. market to
aiwan by December,
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