Compal Electronics has been increasingly requested by its clients to diversify manufacturing bases beyond China, particularly for smart devices, according to a company executive.

SH Peng, executive vice president for smart devices at Compal, said that US-China confrontations will not be settled in the next 3-5 years regardless of the outcome of the upcoming US presidential race, and therefore clients have not softened their requests for relocating production out of China.

As early as in 2007, Compal announced plans to set up manufacturing operations in Vietnam to diversify production risk amid steadily rising labor costs and severe peak-season labor shortages in China, but clients began to seriously support the relocation move only after the US-China trade war broke out in 2018, according to Peng.

As the production capacity at its existing plant in Hanoi is not sufficient to fulfill orders from clients, Compal is building a second plant there at a maximum cost of US$100 million, which is set to start volume production in 2021, Peng noted.

Peng said the Vietnam-bound relocation boom continues to linger among electronics supply chain players, and it remains to be seen whether land, water, power and labor supplies can meet ever-expanding demand there. He added Compal will also seek new manufacturing sites in other Southeast Asian countries.

Peng expects Compal's fourth-quarter 2020 shipments to grow sequentially, mainly driven by strong demand for notebooks and tablets supporting remote work and study, with the momentum to last into 2021.

Compal smart devices EVP SH Peng
Photo: Shihmin Fu, Digitimes, October 2020