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OCTOBER 2026 I I-CONNECT007 MAGAZINE 75 capacity. FSQuality, by contrast, gradually recali- brated its customer and product positioning through actual operations, directing the Thailand plant's incremental capacity more clearly toward demand from the U.S. market in AI, communications, and optical modules. This is more than a simple geographic shift in where orders are produced; it represents a funda- mental redefinition of the factory's role and value proposition. A "second growth curve" in overseas manufacturing does not emerge automatically once a factory is completed. It must be continuously tested and recalibrated against real customers, real costs, and real orders. The Answers Lie in High Value-Added Products The signals prompting FSQuality to adjust its direc- tion came from costs and financial performance. Manufacturing costs in Thailand are generally 15–20% higher than in China, although the gap varies by product type. A significant proportion of key materials still comes from China. Although a growing number of suppliers are establishing a presence in Thailand, their arrival does not create a mature local supply chain over- night. Some currently function primarily as distribu- tion hubs and local service providers. Scale, yield, raw material sourcing, and service capabilities all take time to develop. When products lack suffi- cient added value, it is difficult for a Thailand-based factory to compete directly with factories in China on price, no matter how aggressively it works to reduce internal costs. Thailand's higher overall cost base, therefore, acts as a natural filter. Products that can remain viable for long-term manufacturing in the country must either be subject to clear overseas supply chain require- ments or offer sufficient technical complexity, quality requirements, and delivery value to justify the addi- tional costs. 'All in AI, All in America' Liu summed up the company's new direction in one phrase: "All in AI, all in America." This does not mean that FSQuality is moving away from its automotive electronics and indus- trial control businesses. Rather, its Thailand factory needs is building a product portfolio that is distinct from the more conventional manufacturing capacity of its China operations. In Mr. Liu's view, the factory will increasingly focus on products that "offer healthy margins, involve greater technical sophis- tication and manufacturing complexity, and require stringent quality standards," rather than competing for orders primarily on price. Seen from this perspective, the shift toward AI and optical modules is not simply about chasing fast-growing sectors. It is the result of a combination of factors: the plant's cost structure, the geographic distribution of its customers, and the value proposi- tion of its products.