US Export Regulations Results in Removal of Manufacturing from China

Teradyne, a supplier of semiconductor testing equipment, relocated manufacturing worth approximately $1 billion from China last year, according to a Teradyne spokesperson on Jan 29, following supply chain disruptions caused by US export regulations. The company's main manufacturing site for semiconductor test equipment was a factory in Suzhou, which was subcontracted to Flextronics.

Teradyne, based in Massachusetts, relocated its production after US rules issued in October 2022 restricted exports to semiconductor manufacturing facilities in the country in an effort to prevent US technology from being used by China's military. Many US companies have been attempting to reduce their reliance on China in recent years, as the US-China tech war heats up and regulators restrict trade in sensitive technologies such as chip manufacturing.

Teradyne, which reports earnings on Tuesday, warned investors in its 2022 annual report about the potential impact of the October regulations, and in October 2023 said the restrictions hit both Teradyne's sales to certain companies in China and its manufacturing and development operations. On Jan 26, Teradyne's director of global compliance and ethics, Brian Amero, told a virtual export conference about the move out of China.

"We did manufacturing in China, so we had to get an emergency authorization to continue that activity," Amero said at the Massachusetts Export Center's annual export expo. "We decided that was too risky so we moved manufacturing out of China — at no insignificant expense."