SpaceX Relocates Manufacturing Supply Chains from Taiwan

By Francesco Guarascio, Khanh Vu, and Ben Blanchard
HANOI/TAIPEI (Reuters) – Recently, SpaceX has prompted its Taiwanese suppliers to move manufacturing abroad due to geopolitical tensions. Reports indicate some suppliers are moving their production outside Taiwan, with at least one relocating to Vietnam.

A source from a subcontractor providing components for SpaceX's Starlink satellite internet mentioned that SpaceX requested their manufacturers to produce elsewhere to mitigate geopolitical risks. Another source confirmed that Taiwanese component suppliers were directly asked by SpaceX to relocate their manufacturing.

Geopolitical Factors

Chin-Poon Industrial, a satellite component manufacturer, stated that SpaceX specifically requested the transfer of their manufacturing to Thailand for new orders, citing geopolitical considerations without further details. This move highlights Musk's fraught relationship with Taiwan, which he previously called an integral part of China, provoking backlash from the Taiwanese government.

Taiwan, democratically governed, is viewed by China as its territory. Over the past five years, China has conducted military drills near Taiwan, leading many Taiwanese firms in the satellite and semiconductor sectors to consider diversifying their supply chains.

Investment Plans in Vietnam

In a private meeting in March 2023, SpaceX expressed interest in establishing a manufacturing hub for satellite equipment in Vietnam, seeking guidance on protecting intellectual property. The Taiwanese economy ministry emphasized that short-term political issues should not disrupt international supply chain relationships.

Wistron NeWeb's Expansion

Wistron NeWeb Corporation (WNC) has commenced production of routers and network equipment for Starlink at its facility in Hanam, Vietnam, significantly due to SpaceX's orders. Plans are underway to double the workforce at this site, prompted by the needs of SpaceX.

A supplier aimed at printed circuit boards for Starlink was also prompted by SpaceX to move operations down the supply chain. Furthermore, Universal Microwave Technology, another SpaceX partner, noted it was focusing on expanding manufacturing in Southeast Asia, specifically in Vietnam and Thailand, due to geographical concerns.

Taiwan's Satellite Industry

Taiwan has a robust satellite industry with around 50 companies focused on ground equipment and components, generating over T$200 billion (~$6.23 billion) in output last year. SpaceX is linked with about a dozen direct suppliers in Taiwan, supported by numerous local vendors.

In September, Vietnam's government claimed SpaceX was interested in investing $1.5 billion in the country, though concrete details of these plans remain uncertain. Additionally, Shenmao Technology, a supplier of soldering materials, announced a $5 million investment to establish a unit in Vietnam but did not disclose client information for that facility.

Conclusion

The shifts in SpaceX’s supply chain reflect a broader strategy to navigate geopolitical challenges while maintaining robust production capabilities in Southeast Asia.