*

SpaceX's requests motivated by geopolitical risks, sources

say

*

Taiwan hosts multi-billion-dollar satellite component

industry

*

Companies invested in Vietnam this year, have plants in

Thailand

*

SpaceX's supplier WNC produces Starlink routers in Vietnam

By Francesco Guarascio, Khanh Vu and Ben Blanchard

HANOI/TAIPEI, Nov 5 (Reuters) -

Elon Musk's SpaceX asked Taiwanese suppliers to transfer

manufacturing off the island, leading to some relocating

portions of their supply chain, according to sources employed by

and close to the equipment makers and corporate documents.

A source at a company that is one of the numerous

subcontractors that provide components for SpaceX's Starlink

satellite internet products said SpaceX asked their

manufacturers to produce outside of Taiwan because of

geopolitical risks, pushing at least one to move production to

Vietnam.

A second source who collaborates with Taiwanese satellite

component makers on the island said suppliers were directly

asked by SpaceX to transfer manufacturing abroad.

Chin-Poon Industrial ( CHNPF ), a satellite component

maker which said it was recently a SpaceX supplier, told Reuters

the U.S. company requested they move their manufacturing from

Taiwan to Thailand for new orders "mostly due to geopolitical

considerations". It did not elaborate.

The sources declined to be identified because the

information was not public. SpaceX did not reply to requests for

comment.

SpaceX's requests place a renewed focus on the contentious

relationship Musk has had with Taiwan, especially after he said

last year it is an "integral part" of China, drawing sharp

criticism from the Taiwanese government.

China views democratically governed Taiwan as its own

territory and has staged almost daily military drills around it

over the past five years and has never renounced taking the

island by force. Taiwan rejects China's sovereignty claims.

China's drills have increased in intensity since 2022, with

the latest war games it carried out last month replicating a

blockade of the island. Amid the potential for devastating

disruptions to their supply chains, some Taiwanese companies in

the strategic satellite and semiconductor industries are taking

steps to reduce their reliance on domestic manufacturing.

A Vietnam-based investment adviser told Reuters in October

SpaceX representatives said in a private meeting in March 2023

the company was interested in setting up a manufacturing hub for

satellite equipment in Vietnam and sought advice on protecting

intellectual property.

When contacted by Reuters about Taiwanese SpaceX suppliers

moving abroad, Taiwan's economy ministry responded, "Short-term

political factors should not affect the supply chain

relationship between international satellite companies and

Taiwan manufacturers."

VIETNAM EXPANSION

Taiwanese SpaceX supplier Wistron NeWeb Corporation

(WNC) this year began producing routers and other

network gear for Starlink at its factory in the northern

Vietnamese province of Hanam, about an hour south of Hanoi, two

of the plant's workers and a contractor said.

WNC's expansion in Vietnam is largely due to orders from

SpaceX, said one of the workers.

The Hanam factory plans to at least double its 3,000-strong

workforce, the contractor and one of the workers said. Outside

the factory, several banners advertised job offers at the plant,

Reuters reporters observed in mid-October.

The first source familiar with SpaceX's requests to move out

of Taiwan is an employee of a Vietnam-based foreign-owned

supplier whose components for printed circuit boards are in

Starlink's ground equipment through WNC-made components.

The source said a SpaceX vendor they work with that supplies

WNC was directly told by SpaceX to produce outside of the

island.

WNC declined to comment, citing customer confidentiality.

Its latest annual report in April said: "In the face of

geopolitical risks and ever-changing customer requirements, WNC

has continued to expand its global manufacturing capabilities".

Universal Microwave Technology, another SpaceX

supplier and manufacturer of satellite components, invested in a

factory in Vietnam this year, according to a Taiwanese official

and public documents from the company.

Universal Microwave Technology declined to comment on

individual customers, citing confidentiality agreements, but

said it was expanding its presence in Southeast Asia, including

new factories in Thailand and Vietnam.

"The planning of overseas production capacity will help

customers reduce their doubts about geographical risks, gain

customer recognition, and increase the breadth of cooperation

with customers," it said.

Taiwan has a large satellite industry, with about 50

companies producing ground equipment and sensitive components,

according to the economy ministry and industry data. The

government estimates the sector's output exceeded T$200 billion

($6.23 billion) last year.

SpaceX has about a dozen direct suppliers from Taiwan, which

rely on dozens of domestic vendors, the source who collaborates

with the island's satellite industry said.

Vietnam's government in September said SpaceX wanted to

invest $1.5 billion in the country, though the timing and

purposes of the actual investments remain unclear.

Shenmao Technology, a supplier of soldering

materials for printed circuit boards, which has provided

components to SpaceX, said in April it would spend $5 million to

set up a unit in Vietnam, without saying who its clients would

be for products from that facility. The company did not respond

to a request for comment.