At the end of October 2025, India’s government announced the first $627 million of projects to boost its electronics components manufacturing capacity – only part of the country’s $2.7bn commitment to reducing its import dependencies.
From around the same time, a new chapter began in the ongoing tariffs saga as the US considered them for electronics chips – a significant blow to the trade of foreign electronics.
While electronics companies watch geopolitical moves like this play out, they don’t often realize they are already at significant risk. All companies, but especially electronics companies, are exposed when they rely on a single-location or single-country manufacturer. Not only do new tariffs become more threatening, but this setup introduces a slew of other potential issues that could bring an entire supply chain to a grinding halt – including localised disasters or country-wide crises.
Unfortunately, most electronics manufacturers, even large ones, centralise their operations in a single location or single country. This decision makes sense with streamlined logistics, lower costs and easier oversight. The efficiency usually allows the company to pass the lower cost benefits to their clients, and therefore to the end user, but unfortunately, relying on a single-location manufacturer to make products, could lead to significant revenue losses and product disruption.
During the Covid-19 outbreak, many companies learned this the hard way. As the pandemic first swept through Asia, factories there were forced to shut down, and ports became choked with backlogs. Firms that relied solely on one country for assembly suddenly found they had no plan B.
Similarly, the war in Ukraine disrupted car part supplies for German automakers because crucial wire harness factories in western Ukraine went offline, forcing BMW and Volkswagen to suspend production. These examples all underscore the same lesson: a local crisis can quickly snowball into a global supply nightmare if manufacturing is heavily concentrated in one location.
The consequences of such disruptions can be devastating for companies of any size. A sudden loss of production capacity can lead to lost sales and market share, as competitors with more diversified production capabilities step in. Effects can be customer defections as customers turn to more reliable suppliers; skyrocketing recovery costs, due to emergency sourcing and expedited shipping, which can significantly eat into profits, or contract penalties and increased insurance premiums as a result of breached supply agreements and claims.
These risks are considerable, but somehow get less attention compared to the supply chain disruption posed by tariffs and other geopolitical tensions. Yes, a new import tariff can raise costs by 10% or more overnight. Yet those challenges, while serious, rarely shut down operations entirely. A company can often adapt to tariffs by tweaking prices or supply routes. By contrast, if a manufacturer has its one and only factory knocked out – whether by a cyclone or a sudden political upheaval – there is zero output until it’s fixed. A tariff is a financial obstacle; a factory shutdown is an existential threat.
The wiser approach is to assume that disruptions will happen somewhere, sometime – and to prepare for them. Many firms have started diversifying manufacturing during recent trade wars not only to dodge tariffs but to hedge against broader risks. Apple’s high-profile decision to shift some production from China to India is one example, aimed at reducing an over-reliance on one country. Leaders are realising that, tariffs or no tariffs, concentration risk is simply too high. Distributing production across multiple regions doesn’t eliminate these risks, but is a way to absorb the shock. Doing so is easy – simply look for a partner that has at least two country locations that can produce your product. In many cases, they still have the economies of scale – so no increased production costs.
Most future-ready manufacturers already operate across multiple geographies: Europe, the US, and Asia – not just to increase their commercial reach, but to build the kind of operational elasticity that keeps them steady in uncertain times. We are seeing evidence that industries such as consumer electronics are actively expanding manufacturing beyond China, diversifying into India, Vietnam and Southeast Asia. This geographic spread provides a buffer. Customers were increasingly uncomfortable relying on one factory or one country for all production needs. And in a market where there are other risks to contend with, including tariffs, the lack of manufacturing capacity is one that is easy to avoid.
Marc Witzke is the director of business development at EMS/ODM, Trio Engineering.
