Kaga Electronics Expands Manufacturing Footprint in Southeast Asia and Mexico Amid US-China Tensions

Japanese components supplier Kaga Electronics is strategically expanding its manufacturing presence beyond China, establishing new facilities in Thailand and Mexico to cater to growing demand from companies seeking to diversify their supply chains. This move comes as geopolitical tensions between the U.S. And China continue to prompt businesses to re-evaluate their manufacturing locations.

Responding to Shifting Supply Chains

Kaga Electronics’ decision to build a new contract plant in Thailand reflects a broader trend of manufacturing capacity shifting from China to Southeast Asia. According to a report by Nikkei Asia, demand for contract manufacturing services is increasing in the region as companies aim to reduce their reliance on China [Nikkei Asia]. The new Thai plant will aim to capture this growing demand.

Investment in Mexico to Serve North American Market

In addition to its expansion in Thailand, Kaga Electronics is investing approximately 5 billion yen (around $34 million USD) in a new plant in Mexico [Nikkei Asia]. This investment is specifically targeted at capturing demand from companies relocating to North America to mitigate risks associated with U.S.-China trade tensions. The company anticipates continued strong consumption in the North American market.

Background: Kaga Electronics and US-China Trade Tensions

Kaga Electronics has been navigating the complexities of U.S.-China trade tensions for some time. Prolonged trade tensions and a broader movement to diversify supply chains have been factors influencing the company’s strategic decisions [Kaga Electronics Management Briefing Material]. The company already operates a facility in Shenzhen, China, established in 1999 [Kaga Electronics Management Briefing Material].

Key Takeaways

• Kaga Electronics is expanding manufacturing outside of China in response to US-China tensions.
• New facilities are being established in Thailand and Mexico.
• The Mexico plant will focus on serving the North American market.
• The company has been strategically adjusting to trade tensions for several years.