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In a change of course, American businesses like Amazon and Microsoft are expanding in Taiwan, rather than mainland China. The move is a reaction to rising costs of labor and increased trade risk due to heightened tensions between China’s communist government and the Trump administration. Kotaro Hosokawa and Kensaku Ihara report at Nikkei Asian Review:
The interest in Taiwan owes partly to a cheaper pool of talent than in China, where labor costs are climbing steadily. In Taiwan, entry-level engineers with master’s degrees employed in electronics or telecommunications earn an average of about 45,000 New Taiwan dollars ($1,509) a month, according to a local staffing agency.
American and Taiwanese businesses built a complementary relationship during the heyday of personal computers back in the 1990s. The U.S. side designed devices for Taiwanese partners to assemble, an arrangement that led to the creation of the contract manufacturing model. The semiconductor industry went down a similar path with the establishment of dedicated chip foundries.
This division of labor proved far cheaper than handling development and production under one roof. But the U.S.-Taiwan partnership has faded from the forefront in recent years as European and Japanese companies also adopt a design-focused business model.
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