In an ambitious step towards diversifying the supply chain for critical technology components, Taiwanese company Passive System Alliance (PSA) is set to start shipping printed circuit boards (PCBs) from its new manufacturing facility in Malaysia. Targeting an initial launch period around June or July this year, PSA plans to first cater to the Vietnamese market, with broader aspirations for the Malaysian plant to become a pivotal regional hub for Southeast Asia. This move reflects a growing demand for alternative sources of PCB production, traditionally dominated by China and Taiwan, amidst ongoing global supply chain reconfigurations.
PSA, standing as Taiwan’s second-largest supplier of passive components, embarked on this strategic expansion by acquiring Japan’s Elna through its subsidiary, Global Brands Manufacture, in 2018 for 3.5 billion yen ($23.7 million). This acquisition, primarily driven by the intensifying trade tensions between Washington and Beijing, positioned PSA advantageously with access to production facilities outside of China, particularly in Malaysia and Japan. The construction of the new five-story manufacturing plant adjacent to Elna’s existing facility represents a significant investment towards enhancing PSA’s server supply chain capabilities.
The shift towards establishing server production capacity outside China has been accelerated by U.S. tariffs and the perceived national security implications of server technology. Major server assemblers, including Foxconn and Quanta Computer, have already initiated expansions in Southeast Asia. PSA’s president, Ian Yang, notes the emergence of a new server supply chain ecosystem in the region, highlighting the challenges and opportunities of replicating China’s efficient manufacturing landscape elsewhere.
Yang’s observations underscore the logistical and operational hurdles of building a new supply chain ecosystem outside the well-established networks in China and Taiwan. The move to Malaysia, coupled with considerations for further expansion into India, signals PSA’s cautious but forward-looking approach to navigating the complex geopolitics and economics of global tech production. This strategic positioning not only aims to mitigate risks associated with over-reliance on a single region but also leverages the potential of Southeast Asia as a burgeoning hub for tech manufacturing and supply chain resilience.
