Taiwan's Pegatron to finalize US factory plans by July

Pegatron, a key supplier for Apple and Dell, is close to finalizing plans for a factory in the US, according to President and CEO Kuang-Chih Cheng.

The company is expected to make an announcement by July 2025 during its annual meeting.

Cheng indicated that key factors influencing the decision include land and labor costs.

He said that electricity is crucial for artificial intelligence server production.

Cheng also mentioned that the potential locations being considered are similar to those selected by competitors.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Taiwanese manufacturers’ broader shift away from China manufacturing

Pegatron’s U.S. expansion plans reflect a wider industry trend among Taiwanese electronics manufacturers seeking geographic diversification beyond China.

Pegatron’s Chairman Tung Tzu-hsien previously noted that mainland China “lost its competitive edge five years ago,” prompting the company to pursue manufacturing alternatives in multiple regions 1.

This diversification isn’t limited to the U.S. Pegatron has already announced a $1 billion investment in three high-tech factories in northern Vietnam and is developing a $68.3 million housing project in Hai Phong to accommodate 10,000 workers 2.

The company is simultaneously expanding in India with an additional NT$578.57 million (US$19.1 million) investment in its Indian subsidiary to boost manufacturing capacity for communication devices 3.

This multi-country approach mirrors strategies adopted by other Taiwanese manufacturers like Foxconn and Wistron, who are similarly establishing production bases across Southeast Asia and North America to reduce concentration risks.

2️⃣ Electricity demands becoming critical factor in AI manufacturing site selection

Pegatron’s emphasis on electricity as the “most critical factor” for AI server production is backed by significant industry data on AI’s extraordinary power requirements.

Data centers are projected to account for 44% of U.S. electricity load growth from 2023 to 2028, with utilities potentially needing to increase annual energy generation by 7% to 26% by 2028 just to meet this rising demand 4.