Under threat from China, Taiwan’s companies pivot to defense manufacturing : NPR

Po Sheng Lai, the founder of Shern Yeong Precise Optical, a company in the northern Taiwanese city of Yilan that makes high-end glass is pivoting to making defense products.

Emily Feng/NPR

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Emily Feng/NPR

Po Sheng Lai, the founder of Shern Yeong Precise Optical, a company in the northern Taiwanese city of Yilan that makes high-end glass is pivoting to making defense products.

Emily Feng/NPR

TAINAN, Taiwan — The technology behind the plastic injection mold machines that hum in a factory in this town in southern Taiwan were once used to make Buddhist temple decorations. A generation later, the company, Hwa Meei Optical, now makes recreational eyewear, such as ski goggles and sunglasses.

But it has ambitions to outfit soldiers.

“Every generation at Hwa Meei improves. Now we will have to see what the third generation will do,” says Lin Shunfu, a company vice president.

He is now shifting the company into the defense sector to manufacture and sell shatterproof, bullet-resistant eyewear for the military.

As China’s military might grows, the Asia Pacific region is in an arms race to both deter and prepare for war. Taiwan is no exception. It’s a self-governing island that China claims as its own territory, to be conquered by force if necessary. Taiwan has extended its mandatory military conscription period for men from four months to a year and is intensifying its own military drills. In July, the White House announced it would send Taiwan $345 million worth of weapons, taken directly from the U.S.’ own stockpile for the first time, as well as other defense services, such as training.

Now Taiwanese private companies are also pivoting into the defense sector and making weapons, and U.S. defense contractors are exploring ways to manufacture and design noncore components of their weapons systems in Taiwan.

To do so, they will need to work within the Taiwanese military’s rigid approach to reform and a historical preference to rely on government research institutes for equipment upgrades.

However, under pressure to match China’s accelerating military capacity, Taiwan’s military is looking for creative ways to boost its defense abilities in a short period of time, and it has been loosening once-strict procurement rules to allow private companies to develop dual-use technologies for its military — giving companies like Hwa Meei a chance.

“Every year Taiwan spends billions of dollars to buy American defense equipment. It is almost [like] we are paying the U.S. protection money. But if U.S. companies could support local businesses, some of the benefit would return to Taiwan and ensure we help each other,” Lin says.

3,000 drones by next year

Twice in the past year, China’s military has conducted military exercises simulating a full blockade of Taiwan. In a real conflict, such a blockade would make it impossible for the U.S., Japan or nearby countries to ship in any weapons or reinforcements not already stockpiled on the island.

That has led Taiwan’s manufacturers to ask: Why not build up defense supply chains

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Taiwan’s Delta Electronics increasing ‘everywhere’ on EV, server boom

The brand of Delta Electronics is pictured at their business, in Taipei, Taiwan, March 17, 2021. REUTERS/Ann Wang

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TAIPEI, April 29 (Reuters) – Taiwan’s Delta Electronics Inc (2308.TW), a supplier of electricity parts to firms this sort of as Apple Inc (AAPL.O) and Tesla Inc (TSLA.O), is growing production “in all places” on a boom in electrical automobiles and servers, it claimed on Friday.

CEO Cheng Ping, in buoyant remarks on a 1st-quarter earnings phone, explained the company was creating new factories in Taiwan, China, India and Thailand and looking for new manufacturing web-sites in the United States and jap Europe.

“We are setting up capacity everywhere you go,” he reported, soon after reporting first-quarter revenue rose 14% on-yr to T$82.5 billion ($2.81 billion). Gross revenue in the quarter was T$22.5 billion, up 4%.

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Chairman Yancey Hai included the enterprise, which generates some 60% of its items in China, was seeing sturdy demand for electric powered cars, or EVs, servers and details centres.

Far more classic automakers such as Ford Motor Co (F.N), not just Tesla, are observing their EV income soar, a trend that will proceed to Delta’s gain, he added.

“Our car office often operates overtime, extremely late several hours. I frequently ask them to go residence before. I convey to them, you are going to be at this for numerous additional several years – it’s not just 1 quarter or one yr.”

On the other hand, Delta has been impacted by COVID-19 lockdowns in China, and hopes its skill to ship goods from there resumes shortly, Hai said. browse much more

“If you deficiency any components, the motor vehicle factory are unable to operate,” Hai explained of EV offer chain difficulties.

Delta, whose shareholders involve Singapore’s governing administration, helps make equipment that manage the move of electric power in a assortment of goods these kinds of as smartphones, personal computers, servers and electric vehicle charging stations.

Taiwan’s tech corporations, a critical element of the world wide provide chain, have boomed on the back of need for tablets, laptops and other machines for the duration of the COVID-19 pandemic, which compelled millions to function and research from property.

Even though important markets are resuming publish-COVID everyday living, electrical motor vehicles, substantial-close computing and 5G demand is continuing to assist a selection of Taiwanese tech companies, like chipmaker TSMC (2330.TW).

Delta’s shares have fallen around 9% so significantly this 12 months, supplying it a market benefit of $21.76 billion. They shut up 1.4% on Friday, vs . a 1.1% acquire in the broader market place (.TWII).

($1 = 29.4030 Taiwan bucks)

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Reporting by Sarah Wu and Ben Blanchard Modifying by Kim Coghill

Our Requirements: The Thomson Reuters Believe in Ideas.

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