Wang's comments provide a crucial insight into the urgent deliberations taking place within global supply chains as companies scramble to respond to the latest round of tariffs imposed by U.S. President Donald Trump, which took effect earlier on Wednesday.
According to a transcript of the analyst call reviewed by Reuters, Wang stated that the newly implemented tariffs are expected to have a limited impact on Luxshare's overall profitability and revenue. This is primarily because the company currently exports only a relatively small volume of finished goods directly to the United States.
However, Wang emphasized the need for Luxshare to seriously consider increasing its investments in overseas manufacturing locations and potentially scaling back some of its planned investment initiatives within China. During the call, which lasted for over an hour, she stated, "If there is a commercial guarantee and we are able to conduct a good evaluation, we do not rule out having some products being localised to meet the needs of the U.S. market."
Wang further elaborated that Luxshare has already communicated to certain customers that such commercial guarantees would be necessary in response to their inquiries regarding the feasibility of providing some North American-based services for products that involve a significant degree of automation in their manufacturing processes. She added a note of caution, stating, "But for this step, we will also weigh some long-term development and safety considerations."
While Luxshare is a significant supplier to Apple, a company widely perceived to have substantial exposure to the U.S. tariffs, Wang refrained from explicitly naming Apple or any other specific customers during the call, adhering to the general reticence of Apple's suppliers to comment publicly on the U.S. tech giant.
Neither Luxshare nor Apple immediately responded to requests for further comments on this matter.
Currently, in addition to its extensive manufacturing base in China, Luxshare maintains production facilities and research and development centers in several other countries, including Malaysia, Thailand, Vietnam, the United States, and Mexico. Beyond its prominent role as an Apple supplier, Luxshare also designs and manufactures a diverse range of electronic devices, such as routers, wireless charging modules, and video conferencing equipment.
Wang indicated that Luxshare is also contemplating increased investment in Southeast Asia, although she did not specify the particular countries under consideration. She noted that a significant shift of consumer electronics production away from Vietnam is unlikely unless the tariffs imposed on Vietnamese products were at least 10% higher than those levied on goods from other nations. This is attributed to Vietnam's relatively mature industrial infrastructure and skilled workforce.
Interestingly, Vietnam, a major exporter to the United States and a country where numerous Chinese manufacturers, including Luxshare, have expanded their operations in recent years, faces a substantial 46% tariff under the new U.S. measures. This compares to tariffs of 36% for Thailand and 24% for Malaysia. The Vietnamese government is reportedly engaged in negotiations with Washington in an attempt to address these tariffs.
Wang also stated that Luxshare is not currently considering expanding its production into India but would be willing to explore this option if specific requests were made by its customers.
Regarding the timeline for establishing new production capabilities, Wang estimated that it would take Luxshare between one and one-and-a-half years to build and commence operations for a new production line in locations where the company already has an existing factory presence.
When questioned about whether the burden of the tariffs would be shared between businesses in the supply chain and end consumers, Wang asserted, "To date, all hardware manufacturers do not foot the bill for tariffs or logistics warehousing ... Nothing like this has ever happened and I think it will be the same in future."
However, she did acknowledge concerns that customers might seek to negotiate lower prices in response to the tariffs, adding, "Customers have always collaborated with suppliers on how to enhance competitiveness." This suggests that while Luxshare does not anticipate directly absorbing the tariff costs, it is prepared to work with its clients to find other ways to mitigate the overall financial impact.