US Reciprocal Tariffs: Operational Impact
In light of the upcoming reciprocal tariffs to be implemented by the United States, we have conducted a review and assessment of potential risks related to business orders, supply chains, production costs, and financial resources.
As for business orders, overall there is no direct impact from the tariffs. This is because the company’s PCB equipment orders are mainly concentrated in Asian countries, with only 3% exported to the U.S. The first batch of shipments has already been completed, and all U.S.-bound orders are under FOB terms, meaning there are no issues with increased tariffs. Meanwhile, all semiconductor equipment orders are from Asia. Furthermore, since our orders are from large, financially sound clients, the risk of bad debt is relatively low.
The impact on production and manufacturing costs is also limited. The main U.S.-branded components used are industrial computers. If there are any unreasonable price hikes, we already have alternative products that can be readily substituted. Other U.S.-made parts account for less than 0.2% of total costs. Regarding China's additional 34% tariff on the U.S., we have completed a comprehensive inventory of Chinese component supply chains. Since Chinese-made components rarely use U.S.-made electronic parts, there is unlikely to be a disruption in the supply chain, and the likelihood of significant price hikes is low.
In terms of company finances, we currently have no long-term or short-term loans, and our debt ratio is around 15%, indicating a healthy and stable cash position.
Additionally, if China were to impose similar tariffs on Taiwan, we have already taken steps to mitigate this risk over the past three years. The company has established a production base in Kunshan, where the local supply chain and manufacturing setup are fully operational. We have also secured a facility in Thailand, which can be used for exports to China if necessary.
Overall, the direct impact of this global wave of tariffs is minimal. However, indirect risks, such as widespread price increases or market contraction due to economic recession, must be closely monitored and responded to in a timely manner to protect shareholder interests and safeguard employee welfare.
It is certain that this round of tariff impacts will inevitably weaken or eliminate many competitors. This presents a potential opportunity. The company does not rule out the possibility of carefully considering synergistic investments or mergers and acquisitions at an appropriate time to expand our operational scale and market share.