Taiwan's network communications industry utilizes AI and 5G technological innovations to successfully overcome US-China trade barriers and expand into the North American market.

Taiwan • Business • 04/26 14:00
Taiwan's network communications industry utilizes AI and 5G technological innovations to successfully overcome US-China trade barriers and expand into the North American market.

Amid rising trade barriers between the US and China, Taiwan's network communications industry has successfully tackled tariff challenges and ensured a stable supply to the North American market by leveraging AI and 5G technology innovations and making flexible supply chain adjustments. Companies such as Accton, Zyxel, and Realtek have made significant strides in the high-end network communications equipment sector and continue to expand their global presence by mitigating risks through a strategy of production diversification.

Key Updates

04/27 17:00

The United States Launches Tariff Talks with 18 Nations: Reciprocal Tariffs Will Be Imposed if No Deal is Made

The U.S. government is advancing tariff negotiations with 18 trade partners, using a new framework from the U.S. Trade Representative, focusing on tariffs, non-tariff barriers, and digital trade issues, with plans to finalize by July 8, 2025. If no agreement is reached, reciprocal tariffs will be imposed. Mexico, Canada, and China are excluded from this framework and will be addressed separately.

04/27 15:02

US-China Tariff War: Pepsi is impacted by a 10% tariff on Irish concentrate imports, reducing its competitiveness compared to Coca-Cola.

Due to its reliance on Ireland for concentrate production, PepsiCo is facing the impact of a 10% import tariff due to the US-China trade war, which weakens its competitiveness in the US market. In contrast, Coca-Cola, which produces its concentrate domestically, is less affected. Both companies are also facing the challenge of a 25% tariff on imported aluminum in the US, which drives up packaging costs. Pepsi's market position in the US has weakened, and it has lowered its full-year profit expectations, while Coca-Cola demonstrates greater resilience.

04/27 14:00

Hwa Sheng Co. sells its Chinese subsidiary's shares and reinvests in Taiwan to invest in new businesses to mitigate risks from US-China tariffs.

Hwa Sheng (stock code: 3202) announced on April 27, 2025, the sale of a 37.04% stake in its Chinese subsidiary, High-Tek Harness Enterprise Co., Ltd. (SAMOA), to recover $10 million to accelerate investments back in Taiwan. The company plans to invest in areas such as organic waste recycling, urban-rural development, and agricultural innovation initiatives, while also improving its financial structure to address challenges posed by the US-China tariff war and avoid the risk of being delisted from the stock exchange.

04/27 12:30

US-China Trade War Heats Up: American Households' Dependence on and Challenges with Chinese-Made Products

The US-China trade war is escalating, with tariffs reaching historic highs, and the reliance of American households on Chinese-made goods has become a central issue. Most everyday items, such as kitchenware, toys, and personal care products, are sourced from China. Even though some production has moved to countries like Vietnam and Mexico, the supply chain continues to rely on Chinese components. The high tariffs have resulted in price hikes, and retailers are worried about disruptions in the supply chain. Experts highlight that it is challenging for the US to fully replace the Chinese supply chain in the short term.

04/26 18:00

The Trump administration's trade war eases, the yield on the US 10-year Treasury bond declines, and Treasury Secretary Besent's influence grows.

The Trump administration recently signaled a de-escalation in the trade war, leading to the U.S. 10-year Treasury yield dropping to 4.267%, which helped stabilize market sentiment. Treasury Secretary Mnuchin played a crucial role in policy adjustments, thereby increasing his influence. The market generally views 4.5% as the critical threshold for the 10-year Treasury yield, making it a sensitive indicator for policy changes.

04/26 14:00

Taiwan's network communications industry utilizes AI and 5G technological innovations to successfully overcome US-China trade barriers and expand into the North American market.

Amid rising trade barriers between the US and China, Taiwan's network communications industry has successfully tackled tariff challenges and ensured a stable supply to the North American market by leveraging AI and 5G technology innovations and making flexible supply chain adjustments. Companies such as Accton, Zyxel, and Realtek have made significant strides in the high-end network communications equipment sector and continue to expand their global presence by mitigating risks through a strategy of production diversification.

04/26 07:29

China waives tariffs on some U.S. semiconductor products, but memory chips will still face high tariffs.

Amid the trade tensions between China and the United States, China has exempted some U.S.-made semiconductor products from a 125% punitive tariff, involving eight IC product tariff codes. Companies are allowed to apply for a refund of tariffs paid between April 10 and 24, but memory chips still face high tariffs. Chinese and U.S. officials have both denied engaging in formal negotiations on tariff issues, indicating that both sides have not reached a consensus in trade talks.

04/26 06:31

Kyle Bass, Investor: An Analysis of Why the U.S. Holds the Advantage in the U.S.-China Trade War

Renowned hedge fund manager Kyle Bass stated that the United States holds an advantageous position in the US-China trade war because the trade imbalance exerts greater pressure on China. Bass pointed out that China's weak economy, anomalies in the bond market, and weakness in the consumer market weaken its negotiating power. The US, on the other hand, is able to endure pressure for a longer period thanks to robust domestic demand and stable consumer spending. Bass believes that recent indications of concessions by China indicate that it is at a disadvantage in the trade war.

04/26 06:00

The United States will levy port fees on Chinese shipping firms and ships, which will have limited impact on Taiwanese shipping firms.

The United States Trade Representative (USTR) announced on April 17, 2025, that it will impose staggered port fees on Chinese shipping companies and vessels made in China as a response to China's unfair practices in the shipping, logistics, and shipbuilding sectors. The new policy will be implemented starting October 14, 2025, with a 180-day grace period. Industry experts believe that Taiwanese shipping companies will be minimally affected because of the low percentage of vessels made in China, keeping a neutral stance on shipping stocks.

04/26 05:01

After talks with the retail giant, Walmart informed Chinese suppliers to resume shipments, with the US side bearing the tariffs, creating new dynamics for Canton Fair exporters.

On April 21, 2025, after a meeting between President Trump of the United States and retail giants such as Walmart, Walmart notified Chinese suppliers to resume shipments, with U.S. buyers shouldering tariffs up to 145%. This action attracted attention at the 137th Canton Fair, resulting in some festive product orders being reinstated, while orders for everyday products remained canceled. Exporters highlighted the importance of maintaining supply chain continuity and considered expanding into South American and Middle Eastern markets to diversify risk.

AI and 5G Technology Driving Industry Upgrades

With the rapid global adoption of AI technology across various industries, data centers have significantly increased their demands for bandwidth, latency, and energy efficiency. Broadcom is set to launch new products supporting 800G and 1.6T DSP in March 2025 and has achieved breakthroughs in co-packaged optics (CPO) technology, which significantly enhances the efficiency of single-mode and multi-mode fiber optics. These technological innovations are key drivers for the upgrade of Taiwan's networking industry, prompting companies to rapidly adopt high-bandwidth, high-density connectivity solutions to meet the needs of AI servers and data centers.

At the same time, the widespread adoption of 5G technology is injecting new momentum into the networking industry. Fixed Wireless Access (FWA), known for its rapid deployment and low setup costs, has become an important part of 5G applications. The U.S. government's infrastructure subsidy policies further promote the proliferation of FWA, with Taiwanese networking manufacturers actively investing in the development and supply of related equipment, successfully capturing the North American market.

Flexible Supply Chain Adjustments to Tackle Tariff Challenges

Facing the pressure of high tariffs imposed by the U.S. globally, Taiwanese networking companies have swiftly adjusted their supply chain layouts. High-end networking products, such as AI data center equipment assembly lines, have been relocated from China to Mexico and the U.S. to reduce the impact of tariffs. Although CPE (Customer Premises Equipment) products bear a 10% reciprocal tariff, the average cost increase is less than 2%, and most costs are shared by telecom operators and customers, thus having limited impact on promotion willingness.

Taiwanese networking manufacturers, leveraging long-term partnerships with U.S. telecom operators like T-Mobile and Verizon, ensure stable supply and maintain competitive advantages in the U.S. market. This flexible production location adjustment strategy enables Taiwanese companies to effectively tackle challenges posed by trade barriers and continue expanding their footprint in the North American market.

Industry Case Studies: Accton, Zyxel, and Lite-On's Strategies

In this wave of supply chain restructuring and technological upgrades, prominent Taiwanese networking companies such as Accton (2345-TW), Zyxel (3596-TW), and Lite-On Technology (4968-TW) have stood out. These companies not only possess technological advantages in high-performance networking products but also flexibly adjust production and supply chain strategies to ensure stable supply to the U.S. market.

For instance, Accton is actively investing in the development of high-end switches and data center networking equipment, establishing close partnerships with major U.S. cloud service providers (CSPs). Zyxel focuses on FWA equipment and 5G CPE products, successfully integrating into the supply chains of major U.S. telecom operators. Lite-On continues to innovate in optical interconnects and high-speed transmission components, supporting AI data centers' demand for high-bandwidth connectivity.

Dual-Drive of Market Demand and Technological Innovation

The demand for high-spec networking products in the U.S. market remains strong, especially from large CSPs like AWS, Google, Microsoft, and Meta. These companies' demand for optical interconnects and high-bandwidth equipment is a key driver for the ongoing growth of Taiwan's networking industry.

Moreover, with the advancement of the AI factory concept, such as NVIDIA's announcement of the AI factory hardware architecture and dedicated operating system "NVIDIA Dynamo" at the GTC 2025 conference, the demand for high-performance networking equipment is further boosted. Taiwanese networking companies, through technological innovation and flexible supply chain adjustments, successfully seize this market opportunity.

Supply Chain Restructuring and Diversified Production Location Strategy

Amid the global supply chain restructuring trend, Taiwan's networking industry is actively promoting a diversified production location strategy. In addition to relocating some production lines to Mexico and the U.S., some companies are also setting up new capacities in Southeast Asia to diversify risks and enhance supply chain resilience.

This flexible production location layout not only reduces tariff impacts but also enhances supply stability to major markets. Taiwanese networking companies, during the global supply chain restructuring process, demonstrate strong adaptability and forward-thinking planning capabilities, laying a solid foundation for continued international market expansion in the future.

References

People Also Ask...

faq

What new breakthroughs has Taiwan's network communications industry made in AI and 5G technology?

faq

How does Taiwan's network communications industry adapt its supply chain flexibly to address challenges posed by US-China trade barriers?

faq

How does Taiwan's network communications industry tackle challenges through AI and 5G technology innovation amid the US-China trade barriers?