On an early October day in Plano, on the outskirts of Dallas, Texas, Delta Electronics CEO Ping Zheng looked over the manufacturing facility he recently purchased. Watching as ongoing renovations proceeded at the plant, he could not help but feel that it was not enough.

Noticing a “For Lease” sign on the building across the street, without hesitation he instructed his subordinate: “That one on the other side, let’s go ahead and buy that as well.” 

From Canada to New Jersey, Texas and Michigan, Delta Electronics has made extensive investments in land and factory real estate in North America, with Plano being the largest such outlay.

The Plano facility spans around 11,200 square meters. Combined with the recently purchased plant and new construction, the production line is anticipated to reach over 46,000 square meters by the end of 2024, tripling in area to become Delta Electronics’ largest production base in Asia.

If talent is hard to find, fly in some Taiwanese engineers

The industrial environment in Texas has three major characteristics: Unions are not strong, green electricity is not only cheap, it is also exempt from state taxes. Kelvin Huang, president of Delta Electronics (Americas), relates that the company chose Texas because it launched local production in 2015, and that utilizing existing resources benefits future expansion efforts.

Plano is just a 10-minute drive from Richardson. Known as the Telecom Corridor, it is home to the main production bases of such technology companies as AT&T, Verizon, Cisco, and Texas Instruments, and it is one of Texas Instruments’ main industry clusters.

Delta Electronics plans to allocate 100 R&D personnel to its Texas facility, the most of any of its American locations. In addition to recruiting locally, it has already accommodated for sending a major contingent of engineers to Texas to work on rotation, and it plans to purchase new local housing to accommodate expatriate workers.

Delta Electronics triples its expansion in Texas (Source: Delta Electronics)

Delta Electronics is not the only Taiwanese EV supply chain enterprise to set up a base in Texas.

One by one, Taiwanese companies including Pegatron, Lite-On, and major vehicle reduction gear maker Hota Industrial, have announced plans to establish operations in Texas. And so Texas is becoming another Promise Land for the Taiwanese supply chain.

75% American-made threshold, even Elon Musk is anxious

The tension can be traced to the Biden administration.

Jobs Act, Inflation Reduction Act, and the Chips and Science Act, allocating a massive US$2.3 trillion. These funds provide huge business opportunities in electric vehicle (EV), telecommunications, and energy infrastructure.

However, there are conditions for getting one’s hands on the money.

Under the terms of the Inflation Reduction Act passed in mid-August, consumers can get a tax rebate of up to US$7500 with the purchase of an EV. However, this is restricted to new cars assembled in the United States, and raw materials and battery parts and components must also come from America.

In addition, the government is putting its weight behind promoting the installation of charging stations and 5G broadband equipment, also placing priority on Made in USA.

The standards for “Made in North America” are also increasingly strict. The USMCA requires the automobile industry to raise the proportion of domestically-made parts from 62.5 percent to 75 percent. This past March, Biden appealed to consumers to “buy American,” further announcing that the standard for “Made in USA” would be raised from 55 percent U.S.-made components to 75 percent within seven months.

The government's trade protectionism has made U.S. customers anxious.

“An automobile purchasing higher-up asked me, ‘Why not directly produce in the United States? I’ll help you think of how to make it happen!’” reflects Chen Kuang-yu, general manager of fastener giant Sumeeko. This is unprecedented.

Ford was even more explicit, indicating that it would no longer add fastener suppliers outside the United States. Under various pressures, Chen relates that “now we are seriously considering manufacturing locally.”

Tesla plant in California (Source: Ming-Tang Huang)

One other individual who is pulling Taiwanese manufacturers to Texas is none other than Elon Musk.

This April, Musk’s mega plant in Austin, Texas commenced manufacturing. “The client hasn’t made production volume plans, instead just telling us to hurry up and get over there,” says Hota Industrial CEO Shen Kuo-jung. And by “client,” Shen is referring to Tesla Motors.

Hota is currently supplying Tesla's facilities in California and Texas, as well as Berlin, Germany. In the future it will establish manufacturing facilities of its own in the United States, marking the first time the company has set up operations outside of Asia.

Shen believes that the company will most certainly engage in “smart” manufacturing in the U.S., and has already anticipated difficulties involving recruitment and costs. “We hope the customer can help with local recruiting, and raise purchasing prices, up until we can overcome production bottlenecks in the preliminary stage.”

“Made in the USA is a must. The faster you go, the more you get,” says Kelvin Huang, president of Delta Electronics (Americas).

Most EV purchases come with a tax rebate, and every state government has rolled out stipends on charging equipment, so that hopefully all interstate highway interchanges will be conveniently equipped.

Moreover, stipends and preferential policies are often sweetest in the first few years. Electric vehicles and large-scale infrastructure business opportunities have a five-year push period, so the timing is tight. Delta Electronics, already a major vendor to the U.S. of 200 kilowatt fast charge equipment, has already moved up its schedule for volume production of charging equipment in Texas by six months, from December to June of next year.

Delta Electronics is also accelerating the production of telecommunications power systems, mainly produced at its existing Texas plant.

Major U.S. telecom industry companies all currently purchase from Delta, and over the next five years the capital investment that the Big Three telecom companies made in upgrading 5G infrastructure will come fully into play as demand for communications systems heats up even further.

Following plant expansion, Delta Electronics’ new Texas facility will add production lines for onboard controls and charging modules for EVs, transformers, and network equipment to supply top U.S. automakers and telecom companies.

Delta Electronics runs eight research and development (R&D) centers throughout the Americas, which is the key to the company’s leading position in the American market.

According to Kelvin Huang, the most efficient charging product on the U.S. market at this time is Delta Electronics’ 400 kilowatt charger. Thanks to the combined efforts of the Raleigh (North Carolina) and Detroit R&D teams, this charger enables a car to gain 160 kilometers of range after charging for just 10 minutes.

The biggest advantage of having local R&D teams on the ground is specially formulating specifications to meet local market demands and user benefits. “There’s just no way to decide what Americans use from Asia,” says Delta’s Huang. This is a step that Taiwanese businesses moving into U.S.-based manufacturing must take behind the scenes.

American staff sent to Thailand to learn manufacturing

Delta Electronics’ automobile products, once manufactured in its Thailand plant, will be gradually reproduced and shifted to Texas. New recruits hired in the U.S. must first work in Thailand for a few years to become familiar with the entire manufacturing experience before returning to work in Texas.

Delta also plans to offer internships and scholarships to students at nearby universities and University of Texas at Dallas, systematically cultivating local talent.

The top goal of personnel training is to transition from end-stage assembly so that, following expansion of the Texas plant, it can raise the proportion of locally -manufactured parts and components, starting with PCB production. “This will be a challenge,” admits Huang.

And Delta Electronics has experience. The Plano plant started engaging in metal stamping in 2019, and manufacturing server cabinets for shipping to clients at major data centers in the U.S. Looking ahead, the company anticipates conducting more and more of its production processes in the United States.

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Translated by David Toman
Edited by TC Lin
Uploaded by Ian Huang