Taiwan IPC Weekly News 8 May, 2025

Advantech’s Strategy to Navigate Tariffs and Benefit from U.S. Manufacturing Reshoring

Source: 美國組裝+台灣直送，研華拆解關稅難題出招，將受惠製造業回流美國趨勢

Original News Issued Date: 30 April 2025

What to learn from this article:

• "Advantech has not raised prices, as the 90-day 'grace period' for tariffs is still in effect."

• "Advantech views U.S. manufacturing reshoring as a significant opportunity, especially with the growing demand for factory automation."

• "Advantech has implemented several measures to mitigate the impact of tariffs, and to avoid absorbing the costs itself where possible.”

In response to the reciprocal tariffs imposed by the U.S., Advantech stated during its online investor conference on Wednesday (30th) that it has not yet implemented any price adjustment measures, as the 90-day 'grace period' remains in effect. To address the tariff issue, the company has been working with customers to ship products directly to their destination markets. Advantech also highlighted its strong assembly capacity in North America, which helps reduce the impact of the tariffs.

Eric Chen, Advantech’s CFO and General Manager of Integrated Operations, remarked that President Trump’s push to reshore manufacturing to the U.S. presents a significant opportunity for the company, as it is expected to drive strong growth in demand for factory automation. Currently, Advantech’s main production capacity is distributed approximately 45% in Taiwan, 45% in China, 8% in Japan, and 2% in Malaysia. This production structure is expected to remain unchanged through 2028. However, an expansion is planned for the 2028–2032 period, during which a fourth manufacturing site will be established—most likely in Southeast Asia or the United States.

Linda Tsai, General Manager of Advantech’s Embedded-IoT Group, noted that the company currently operates a sizable back-end assembly plant in Northern California. In addition, a new assembly facility in Southern California is scheduled for completion by the end of this year. Once the new facility reaches full production next year, Advantech’s total assembly capacity in North America is expected to double. Currently, 70% of the company’s exports to the U.S. are system products, allowing the possibility of system assembly being relocated from Taiwan to the U.S. Regarding the potential establishment of a local SMT production line, the company is still in the evaluation stage and may initially explore working with contract manufacturers.

Chen noted that when the reciprocal tariffs were initially implemented, Advantech had begun discussions with customers regarding potential price increases. However, with the introduction of the 90-day exemption period, those conversations were put on hold, and no price adjustments have been made to date. Currently, approximately 40% of Advantech’s business involves customers directly absorbing the tariff costs, while the remaining 60% is subject to ongoing negotiations with key clients. In principle, the company aims for customers to shoulder the costs, though some exceptions are anticipated.

In addition, Advantech has implemented several measures to help customers navigate the impact of the tariffs. For approximately 40% of its shipments—although delivered to U.S.-based customers—the final destinations are actually outside the United States. Previously, these shipments were routed through the U.S. before being redistributed. Now, they can be shipped directly from Advantech’s factories to the end markets, effectively avoiding U.S. tariffs. Another key measure is leveraging the company’s assembly capacity in North America to produce and deliver products locally to customers.

Acqutek specializes in supporting our customers with industrial-grade computers from Taiwanese manufacturers.

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Acqutek specializes in supporting our customers with industrial-grade computers from Taiwanese manufacturers.