Taiwan has become a global hub for outsourced manufacturing due to its high-tech capabilities, skilled workforce, and advanced infrastructure. As global companies continue to seek efficiency and innovation, many are turning to Taiwan to outsource production in key industries. Various industries are outsourcing to Taiwan, including electronics, biotechnology, and precious machinery. This article explores the top three sectors: electronics, precision machinery, and biotechnology—heavily relying on Taiwanese manufacturing expertise.

1. Electronics: The Powerhouse of Outsourced Manufacturing

Taiwan’s electronics sector is a dominant force in the global manufacturing landscape, particularly in semiconductor production. Companies like Apple, Qualcomm, and Nvidia depend on Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest semiconductor manufacturer, to produce cutting-edge chips essential for a wide array of consumer electronics.

  • Semiconductors: Taiwan produced about 50% of the global semiconductors between 2020 and 2021, with TSMC accounting for 54% of the global foundry revenue in 2020.
  • Local semiconductor production value is predicted to increase by 13.6% from a year earlier to NT$4.17 trillion (US$128 billion) in 2024 from last year, according to the Market Intelligence & Consulting Institute (MIC). The largest contract chipmaker in the world, Taiwan Semiconductor Manufacturing Co. (TSMC), forecasts its sales for 2024 to grow 21-26% over last year, higher than a 20% increase for the global industry of pure-play wafer foundries.
  • In 2024, the production value of local memory chips should grow 20% from NT$152.2 billion a year earlier, with supply and demand almost balanced.
  • Consumer Electronics: Beyond chips, Taiwanese firms such as Asus and Acer are pivotal in manufacturing PCs and smartphones, significantly contributing to their global market shares.

Read more: Taiwan Electronics Manufacturers

2. Precision Machinery: Engine of Innovation

Precision machinery is another major industry outsourcing its production to Taiwan. Taiwanese machinery’s high precision and quality make it indispensable for producing complex components and assemblies required by various global industries.

According to data from the Taiwan Association of Machinery Industry (TAMI), Taiwan’s machinery exported US$34.81 billion in 2022, up 5.1% from the year before, with strong demand for inspection and testing equipment and electronic production equipment. Furthermore, the Taichung City Precision Machinery Innovation Technology Park is a global hub with the highest concentration of machine tool manufacturing worldwide.

3. Biotechnology: Advancing Global Health Solutions

The biotech industry in Taiwan is experiencing rapid growth, driven by both local innovation and global partnerships. International pharmaceutical companies outsource aspects of drug development and manufacturing to Taiwan due to its advanced capabilities and regulatory framework conducive to high-quality production.

The revenue for bio-pharmaceuticals hit 89.09 billion TWD (around US$2.91 billion) in 2022. In the last year 2023, it ended at over $100 billion TWD (around US$3.06 billion), an increase of $11.2bn TWD (~ US$343 million) compared to 2022.

Companies like Johnson & Johnson and Pfizer partner with Taiwanese firms to leverage their expertise in drug development and medical devices. Research and Development: Taiwan is increasingly recognized for its R&D capabilities, attracting outsourcing contracts for developing biopharmaceuticals.

*The exchange rate from TWD to USD is the reference

Conclusion

Taiwan is a vital player in the global outsourced manufacturing sector, offering advanced capabilities in electronics, precision machinery, and biotechnology. As industries continue to evolve and demand more sophisticated production techniques, Taiwan’s role is set to grow, providing substantial opportunities for global businesses to innovate and expand.

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Read more: Outsource Manufacturing: Why Do Startup Businesses Need?


References:

https://www.linkedin.com/pulse/pros-cons-outsourcing-taiwan-what-you-need-know-lonnie-barish-zxpec/ 

https://focustaiwan.tw/business/202404170021