Amidst the intensifying US-China tussle, an unexpected contender, Thailand, seems to be a potential victor in the IT and semiconductor manufacturing sectors. This perspective is upheld by distinguished Thai IT specialists, as they evaluate the international supply chain’s evolving dynamics.
As per a recent Nikkei Asia article dated July 18, HP is strategically collaborating with suppliers to move the production of countless commercial and consumer laptops to Thailand and Mexico in 2023. This move aims at breaking away from an over-reliance on China in its personal computer supply chain.
It was revealed by sources in the know to Nikkei Asia that HP, holding a firm second position in global PC production, intends to transition some commercial notebook manufacturing to Mexico. Concurrently, a chunk of its consumer laptop manufacturing will find its new home in Thailand.
Reacting to HP’s decision, Somchai Sittichaisrichart, the director of SIS Distribution, a well-known Thai IT distributor, expressed surprise. He cites the country’s comparatively high labor costs and workforce shortage as challenges. However, he also emphasized Thailand’s impressive infrastructure capabilities, especially its robust logistics and transport networks, by air, land, and sea. This strength ensures swift deliveries and a resilient supply chain.
He further opined that the increasing trade tensions between the US and China have propelled American companies to explore other production avenues. The U.S.’s growing tariffs on Chinese imports, including goods produced by US firms within China, have added to this pressure.
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“Thailand’s cultural appeal, with its international schools, delicious food, and golf, is an additional draw for foreign business leaders considering relocation,” Somchai added.
Meanwhile, he advised that Thailand should invest more in enhancing its upstream production, product design, and assembly of high-value electronics.
Voicing his thoughts, Puwanart Pientanyakij, a device research market analyst from IDC Thailand, argued that Taiwan, Thailand, and Vietnam exhibit significant potential to become IT and semiconductor production hubs. Thailand’s minimized risk of natural disasters and its geographical edge within ASEAN nations add to its appeal.
He concurred that spreading out manufacturing and supplier sources can curtail the risk of supply chain disruption and dampen geopolitical impacts. HP’s production shift could indeed polish Thailand’s image as an attractive manufacturing location.
Reflecting on HP’s decision, Takon Niyomthai, the head of IT business development at the SET-listed IT retail chain Com7, asserted that it shows Thailand’s crucial role in the company’s operations.
Additionally, Ernest Nicolas, HP’s Chief Supply Chain Officer, emphasized in his recent blog post, “Global Supply Chains in the Age of Resilience,” that HP’s supply chain needs a broader, interconnected perspective. With the learning from recent years, they also need a supply chain designed for resilience, utilizing multi-source strategies for key components and maintaining manufacturing capacity in various strategic global locations to handle potential disruptions.
“In expanding across Southeast Asia, we have well-established manufacturing operations in Singapore, Malaysia, and Thailand and serve regional markets from factories in Japan and Brazil,” added Nicolas.
This article is based on a report by the Bangkok Post.
