Manufacturing in China and Exporting Globally ‘No Longer Viable’: Kyocera

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Kyocera, one of the largest chip component manufacturers in the world, believes China can no longer play its role as the global factory amid heavy sanctions from the United States, and the company has begun shifting production to other places, including Japan.

“It works as long as [products are] made in China and sold in China, but the business model of producing in China and exporting abroad is no longer viable,” Hideo Tanimoto, president of Kyocera, said in an interview with the Financial Times. “Not only have wages gone up, but obviously, with all that’s happening between the United States and China, it’s difficult to export from China to some regions.”

Kyocera is building its first factory in Japan in almost 20 years.

On Oct. 7, 2022, the U.S. Department of Commerce announced new export restrictions on chip manufacturing and advanced semiconductors in a bid to prevent American technology from being used in the development of the Chinese military.

Tanimoto admitted that the U.S. export controls were a reason why the firm cut down its operating profit forecast for the year by 31 percent. Kyocera commands a 70 percent market share globally in ceramic components used in chip-manufacturing equipment.

“If chip equipment makers stop shipments to China, our orders will be somewhat affected … They are now even [being] asked not to ship their non-cutting-edge tools,” Tanimoto said.

Back in 2019, when the Trump administration had imposed tariffs on China, Kyocera had moved the manufacturing of copiers for the U.S. market from China to Vietnam.

Moving Production Out of China

Many companies have moved production out of China or plan to do so. In April last year, for example, Apple began manufacturing its iPhone 13 in India at a site owned by Foxconn, its Taiwanese contract manufacturer. In addition, Apple is sending the production of iPads and AirPods to Vietnam.

Samsung shifted production to Vietnam back in 2019. The company has also decided to manufacture its flagship Galaxy S23 smartphones in India for local sale. Amazon has shut down its Kindle facility in China and now produces FireTV devices in India.

By Naveen Athrappully

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