How US-China Tariff Uncertainty is Shaping the Electronics Market

The ongoing US-China tariff discussions have significantly impacted the electronics supply chain. As the 90-day tariff reprieve nears its end on July 9, companies like MSI and Gigabyte experience increased demand for gaming graphics cards due to potential tariff hikes. This situation underscores the pressing uncertainty impacting global supply chains.

Rising Demand Amidst Tariff Concerns

In a recent shareholder meeting, representatives from MSI and Gigabyte expressed their struggles with stockpiling Nvidia graphics cards in the US. According to MSI Chairman Joseph Hsu, the difficulty arises from two main factors: the availability of newer graphics solutions only starting in April, and the brisk sellout of stocks upon arrival in the US. Hsu noted, “The tariff situation post-July 9 adds substantial uncertainty for the remainder of the year.”

Impact of Tariff Changes

Both MSI and Gigabyte derive approximately 20% of their gaming product revenues from the US. A looming tariff hike could potentially elevate duties on Chinese imports to 145%, drastically affecting their operations. While an extension until the end of August for graphics cards is on the cards, any shifts in tariff regulations could alter this.

There’s a palpable risk that a new “trade war” could dampen demand not just in the US but could trigger ripple effects globally. An anonymous MSI executive stated that the evolving trade tensions might weaken product demand and prompt a restructuring of global production bases. Consequently, MSI plans to expand its production facility in northern Taiwan by 2027 and optimize assembly operations in California.

Future Strategies and Global Impact

Gigabyte, like MSI, recorded record revenues in May by fast-tracking product imports into the US. However, continued tariff instability has cast a shadow over the industry. Both companies are expanding their assembly operations in California, expecting the facilities to be operational by the year’s end. Additionally, Gigabyte is grappling with the rapid appreciation of the Taiwanese dollar, which presents further risks for exporters.

As the tariff deadline looms, it is crucial for key players in the electronics industry to adapt and strategize to mitigate the impacts of shifting international trade policies.