Turkish electronics sector may thrive from trade wars

​​​​​​​By Goksel Yildirim and Emir Yildirim

The Turkish electronics sector has the chance to seize a significant opportunity amid trade wars, as countries facing tariffs are seeking alternative suppliers from markets like Türkiye, a representative told Anadolu.

Yaman Tunaoglu, chairman of the Turkish Electronics Manufacturers’ Association (TESID), stated significant changes to global supply chains and market structures seem inevitable with US reciprocal tariffs that President Donald Trump announced earlier this month, ranging from 10% to 50% on all countries, as well as very high rates on China and Vietnam.

“Negotiations are underway amid the tariff pause but the exemption of the electronics sector from the high tariffs on China shows that the biggest shift in the sector is to come,” he said.

Tunaoglu emphasized that Türkiye’s 10% base rate reciprocal tariff from Washington represents opportunities for its electronics industry to help resolve the country’s current account deficit.

“Türkiye’s exports are 70% dependent on imports, while this rate is 25% in South Korea, 30% in Germany and 50% in Taiwan,” he said. “The 80% domestically-made content of the Turkish defense industry serves as a model to other sectors and the electronics sector draws its strength from the defense industry, which is why it can play a key role.”

Tunaoglu stated that the global electronics sector will maintain its position in 2024 as the world’s largest sector, while production is concentrated in the Asia-Pacific region with 87% of global chipmaking taking place there and 70% of other electronics production.

He noted that China’s leading position, derived from cost advantages and production capacity, as well as the supply chain disruptions due to the coronavirus pandemic and the war in Ukraine, coupled with trade wars, are reshaping the global production landscape.

Tunaoglu noted that leading players like the US and the EU took measures to strengthen their position in the semiconductor market, while 84 large chipmaking plants began construction worldwide in 2021-2024, with investment exceeding $500 billion, citing data from the semiconductor industry association, SEMI.

“Some 49 new chip factories’ construction began in East and Southeast Asia, 18 in the US, and 17 in Europe,” he said.

He noted that Türkiye has the potential to become a regional center of electronics production due to its location and its production and R&D capacities in the defense, automotive and consumer electronics sectors, with exports exceeding $15 billion last year.

Tunaoglu said the country offers short-term opportunities for international firms seeking alternatives to the Asia-Pacific region.

He stated that Türkiye needs to seize the opportunity by imposing a regulation similar to the tariffs on China to encourage domestic production with a balanced approach to evade the potential negative effect on import-dependent sub-sectors and make trade agreements to attract investments from China instead of competing with it.

Tunaoglu emphasized that Türkiye should organize joint investment opportunities with the EU as European countries shift from Russia to focus on defense and green energy and establish special free zones for electronics production with tax exemptions and customs advantages to enterprises.

He noted that public procurements can also support domestic electronics production and strengthen the position of brands operating in the Turkish electronics sector amid global competition, as well as regulations and agreements to create a stable environment for those companies.

Tunaoglu added that the strategies could turn Türkiye into an electronics production hub and support economic growth, and ensure its technological independence.