Luxshare is considering moving more production outside China due to US tariffs, including possible investments in the US market.

Chairwoman Wang Laichun said the tariffs would have limited profit impact but noted potential benefits from localizing production for US customers.

The company operates in several countries and is evaluating further investment in Southeast Asia, though Vietnam and India are unlikely options for now.

Setting up a new production line takes up to 18 months, and Luxshare did not name any customers, including Apple, during the analyst call.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Electronics manufacturing was shifting from China even before new tariffs

Luxshare’s consideration of production outside China continues a trend that’s been developing for years, not just in response to recent tariffs.

Chinese labor costs have been rising at approximately 10% annually for years, gradually eroding the country’s cost advantage that initially attracted manufacturers 1.

Companies like Apple (Luxshare’s major customer) have already been diversifying their manufacturing base, with Apple aiming to meet about 50% of American iPhone demand with products made in India 2.

This broader industry shift includes many electronics manufacturers exploring production in Vietnam, Thailand, and Mexico, where Luxshare already maintains production facilities, giving them a head start.

The pandemic further accelerated this trend, with estimates suggesting up to a third of manufacturing currently outsourced to China could eventually relocate to other countries 3.

2️⃣ New tariff structures create substantial cost differentials between manufacturing locations

The financial impact of the new tariffs creates strong incentives for companies like Luxshare to adjust their global production footprint.

Tariffs on electronics from China are now approximately 54%, compared to just 26% for products from India and 36% for Thailand, creating significant cost advantages for non-Chinese production 2.

For context, analysts estimate these tariffs could increase Apple’s annual costs by $8.5 billion if they maintain their current supply chain structure 4.