Delta Electronics, a producer of power components for Apple and Tesla, has cut its workforce in China by nearly half, in the largest such initiative released by a Taiwanese electronics company in the country.
The sharp reduction comes as electronics companies seek to adjust to the fallout from the U.S.-China trade war and avoid soaring production costs in the world’s second-largest economy.
“Our goal in China is to reduce the direct workforce by 90%. We’re not quite there yet. We have reduced [it] by 40%, ”Yancey Hai, president of Delta, told the Financial Times in an interview.
Taiwanese companies that manufacture computers, servers, smartphones and telecommunications infrastructure equipment for brands such as Apple, Dell, Google and Xiaomi are establishing themselves in Southeast Asia, India and elsewhere.
Pressure from the United States to diversify supply chains outside of China and rising labor costs in the country are driving the change. But most, like Foxconn, are reluctant to explain the impact of the change on their presence in China for fear of angering Beijing.
Delta reported NT $ 282.6 billion (US $ 10 billion) in revenue last year, up 5% from a year earlier, thanks to the manufacturing of power components. such as cooling fans for laptops, solar inverters and motors for electric cars.
It relocated production of its telecommunications electrical equipment to Thailand and Taiwan in 2019 after the United States imposed a 25% import tax on these Chinese-made products as part of the trade war.
Delta is also building four large factories in India, where the company plans to manufacture photovoltaic inverters and industrial automation equipment for the local market and information and communication technology equipment for export.
“For China, the problem is that even without the US-China conflict, China is no longer a good place to manufacture,” Hai said.
Wages in the southern Chinese city of Dongguan have increased tenfold since the company moved there in 1992. [staff] turnover rate. In India it’s much more stable, ”he said.
Delta responded with automation. On its most advanced production line in Suzhou, eastern China, nearly complete automation has reduced the workforce from 42 to just three.
Hai said that while sensitive products such as telecommunications-related equipment have left China for good, other products, such as consumer computer components, continue to be produced in the country.
“We keep the factories there and the things that can be automated, we will make them in China,” he said, adding that China’s strength remains the complete supply chain.
Delta, which established its Thai subsidiary even before settling in China in the early 1990s, is one of Taiwan’s most geographically diverse electronics manufacturers.
Hai said using automation would allow the company to further diversify its manufacturing footprint. “In the future, if we have to do an assembly, if we have a more automatic line, we can do it even in the United States,” he said.
“If we’re going to hire 10,000 people there, forget it. But if we can hire 100 or 200 people in the United States, but with more automated production, we can do it.
