Recently, Taiwan's electronics sector has faced a double challenge from tariffs and exchange rates. According to Bai Fangping, a senior fund manager at the Fidelity Taiwan Growth Fund, Taiwan stocks continue to show resilience amid ongoing fluctuations. The industry has implemented various strategies to mitigate external impacts, seeking opportunities in adversity. Companies that can quickly establish diverse global production bases and adjust their product lines are expected to gain a competitive edge and perform well in the medium to long term.

Trump plans to impose equivalent tariffs on various countries; although laptops, smartphones, and servers are temporarily exempt from tariffs in the short term, the market still worries about a significant increase in supply chain costs. However, Taiwan's electronics industry began accelerating its globalization efforts six years ago, establishing factories in Southeast Asia and Mexico to diversify production bases. These measures allow several Taiwanese companies to conduct final assembly and testing in Mexico, benefiting from tariff exemptions under the US-Mexico-Canada Agreement (USMCA), which reduces the impact of tariffs.

Bai pointed out that while tariff negotiations are still ongoing, the expected impact on Taiwan's electronics sector, including the PC and server industries (especially AI servers), is relatively limited. However, the iPhone supply chain may be affected, as most iPhones are produced in China and India, where tariffs might be higher. Additionally, deep collaboration with global brand giants has become a crucial strategy for Taiwan's electronics industry, enhancing negotiation power and market proximity through production investments and innovative products.

In the long term, the tariff challenges have prompted Taiwan’s electronics sector to shift from 'defense' to 'offense.' Companies that quickly establish diverse global production bases and adjust their product portfolios will hold competitive advantages. The Taiwanese dollar sharply appreciated in May, and the recent weakness of the dollar has led to significant capital flows into emerging markets, including Taiwan's stock market. While the market may worry about exchange rate volatility impacting the earnings of Taiwan's electronics sector, Taiwanese companies are well-versed in using exchange rate risk management measures. Even though orders are priced in US dollars, raw materials and machinery are also purchased in US dollars to balance risks through natural hedging.

Furthermore, competitive Taiwanese electronics giants are expected to gradually reflect new exchange rates in their pricing over the next two quarters, meaning that the exchange rate impact will primarily be short-term. The Taiwanese electronics sector has found opportunities in adversity. Despite pressures from tariffs and exchange rates, their strategies for going international and hedging effectively reduce the relevant impacts. The strong global demand for AI, particularly sovereign AI and advancements in AI, has increased hardware demand. The recent improvements in AI hardware production yields are expected to accelerate the return to a growth path for operations. Taiwan’s electronics industry is set to play a significant role in this technological revolution, especially with promising prospects for the AI supply chain.