Taiwan’s PCB sector reports a 22% YoY order increase in Q1 2024, fueled by U.S. client stockpiling ahead of 2025 tariffs. Analysts warn of overcapacity risks as demand diverges.
Unimicron and Tripod report 15% revenue growth amid U.S. tariff announcements, while TPCA cautions that short-term gains may mask long-term overcapacity risks linked to AI and EV market uncertainties.
Tariff-Driven Order Boom
Taiwan’s PCB manufacturers recorded a 22% year-over-year order surge in Q1 2024, according to the Taiwan Circuit Board Association (TPCA). This spike follows the U.S. Trade Representative’s May 22 announcement of expanded tariffs on Chinese electronics, including PCBs, set to take effect in early 2025. Digitimes reported on May 20 that firms like Unimicron are accelerating Southeast Asian expansions to mitigate geopolitical risks, with 40% of their Q1 orders tied to U.S. networking clients stockpiling high-end boards.
Geopolitical Winds Reshape Supply Chains
Compeq CEO Chen Hsiao-wen noted in a May earnings call that ‘hyper-short-term orders now dominate 30% of our portfolio,’ reflecting clients’ scramble to bypass tariff impacts. Meanwhile, SEMI’s May 18 report highlights a looming divergence: AI server PCB demand is projected to grow 40% in 2025, while consumer electronics orders may drop 8% due to saturation.
Risks Behind the Rush
TPCA’s May 21 advisory warns that current capacity expansions could lead to overproduction by late 2025 if AI and electric vehicle adoption underperform. Zhen Ding Tech’s CFO acknowledged ‘volatility-driven inventory builds’ during their Q1 briefing, with automotive PCB orders slowing to 4% growth—down from 12% in 2023.
Sustainability in Question
While U.S. Commerce Department statements emphasize Taiwan’s critical role in tech decoupling, industry leaders stress the need for R&D shifts. Unimicron’s latest financial disclosure reveals only 8% of its $1.2B revenue is allocated to advanced IC substrate development—a key material for AI chips—lagging behind South Korean rivals.
Historical Context: Trade Wars and Tech Shifts
The current tariff rush echoes 2018-2019 patterns when U.S.-China tensions first redirected PCB orders to Taiwan, resulting in a 17% revenue jump that year. However, the 2020 pandemic-induced chip shortage exposed overreliance on single markets, forcing diversification efforts. Similarly, China’s 2016 push into high-density interconnect PCBs initially pressured Taiwanese firms, but investments in automotive and 5G applications revived growth by 2019.
Precedent in Regional Adaptation
Taiwan’s PCB sector previously navigated disruption during the 2010s smartphone boom, when Apple’s supplier shifts prompted local investments in flexible PCB tech. This pivot mirrors today’s AI-driven substrate race. As Alipay’s 2014 mobile payment surge reshaped China’s tech supply chains, current U.S. policy moves may similarly redefine Taiwan’s role—if firms balance short-term gains with material science breakthroughs.
