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5G Hotspot Maker Moves Manufacturing From China to Taiwan, Partly Because of Trump

Inseego, an early mover in the 5G device space, said it has completed its move out of China for manufacturing, setting up instead with Foxconn in Taiwan. At issue are Trump's Chinese tariffs, as well as ongoing security concerns.

Mike Dano

March 12, 2019

4 Min Read
5G Hotspot Maker Moves Manufacturing From China to Taiwan, Partly Because of Trump

Inseego, an early mover in 5G hotspots, said it finished moving its manufacturing operations out of China and into Taiwan, mainly due to President Trump's tariffs.

"In the fourth quarter, we moved contract manufacturing to Foxconn in Taiwan to achieve greater scale, meet the technical requirements of our new generation of products and eliminate potential future tariff exposure," noted CEO Dan Mondor, according to a Seeking Alpha transcript of his remarks.

The company had, as Fierce Wireless reported, hinted at the move in November, noting that Trump imposed tariffs on products built in China and that as a result the company would move its manufacturing to a country based in "nonimpacted jurisdictions."

Inseego hasn't provided many details around the move, including which companies it worked with in China. However, the company has previously acknowledged that concerns over Chinese espionage also pushed it to move its manufacturing out of the country.

Indeed, the company clearly outlined the situation in the "risk factors" section of its most recent quarterly filing with the Securities and Exchange Commission: "We currently outsource the manufacturing of many of our products to a contract manufacturer located in China and are in the process of moving some production to other contract manufacturers operating in other countries," the company wrote. "The current U.S. presidential administration has called for substantial changes to U.S. trade policy and has imposed significant increases in U.S. import tariffs. We have taken actions to mitigate the impact of such tariffs."

Inseego isn't alone. For example, Arris last year acknowledged that new US tariffs on China goods are imposing more costs and that as a result it would look to move more of its device production and supply chain out of China.

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Other wireless industry executives have addressed the China issue also: "When it comes to China, we will continue to be prudent given the well-known profitability challenges. We certainly remain committed to the market, but the investment needs are not small, and we need to see a clear path to long-term profitability in deals that we take," said Nokia CEO Rajeev Suri earlier this year on his company's quarterly conference call with investors, according to a Seeking Alpha transcript of the event. "There are also risks in the year and there's been a lot of talk recently about worsening economic conditions and the impact of the ongoing U.S.-China trade dispute. These issues are [a] concern. But we would expect in any economic downturn that many governments would still look to boost spending on 5G infrastructure by taking actions such as accelerating the of the spectrum. They would do so given the competition among countries to be 5G leaders and more importantly, as a way to provide both a near-term stimulus and a long-term productivity boost."

On the call, Suri declined several requests to elaborate on the situation, though Nokia clearly could benefit from the ongoing noise around Chinese rival Huawei. US officials continue to argue that Huawei's products create a global security concern because, they argue, those products could be used by the Chinese government for spying. Huawei, of course, has strongly pushed back against those claims.

Inseego -- previously known as Novatel Wireless, maker of the MiFi brand of wireless hotspots -- supplies some of the in-home routers for Verizon's new 5G Home service. The company now also counts Telstra and Optus as 5G device customers.

"We've seen an astonishing acceleration of customer engagements in the last few months," Inseego's Mondor said of the company's blooming 5G business. "Our current service provider pipeline is in excess of 20 opportunities with mobile and fixed wireless 5G. We are obviously thrilled to be out in front in the 5G market."

In its most recent quarter, Inseego reported net revenue of $56 million, up 20.4% compared with a year earlier.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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