CHENNAI: The electronics supply chain is undergoing reorganisation like it did in the late 1990s and the outcome of investments made over the next few years will have a huge impact in the future, said academic and author of Chip War Chris Miller.
Speaking at the Global Investors Meet on Monday, he said the outcome of the current decision will shape the electronics industry. Apart from geo-political tensions and security concerns, companies are moving out of China due to rapid growth in wages making it a less-attractive destination.
“The cost advantage China has long benefitted from is no longer as strong as it used to be. Wages are rising dramatically, far rapidly than countries China is competing with.” There is an extraordinary competition among countries to become China plus-one, he said, adding Vietnam. Thailand, Singapore, Mexico are many viable locations.
“A single country on the world can’t make smart phones on its own. It requires collaboration between a lot of regions, specific regions that specialise in different parts of the value chain. “Governments around the world are pressing companies for diversification through incentives to attract ecosystems, Miller added.
Tamil Nadu is one of the beneficiaries of China plus-one strategy of diversification with major Apple contract manufacturers Pegatron and Foxconn establishing manufacturing facilities near Chennai. Another iPhone maker, Tata Electronics, is coming up with a major facility at Hosur. Apart from Apple, contract manufacturing of other players and key supply chain companies like Corning are coming to the state.