Inseego, the company that makes some of Verizon’s 5G devices, said that it will no longer manufacture its equipment in mainland China. The company said the move stems directly from President Trump’s tariffs on the sale of Chinese goods in the United States.
“We are moving to our production to a Tier 1 contract manufacturer with a global footprint outside of Mainland China,” said Dan Mondor this week during Inseego’s quarterly conference call with analysts, according to a Seeking Alpha transcript of his remarks.
“As you know, in the Q3, the Trump administration announced 10% tariffs on the list three set of products for 2018, with the 10% increasing into 25% into 2019. We are well underway with moving the manufacturer of our products out of China to other nonimpacted jurisdictions,” said Inseego CFO Steve Smith during the call.
Smith didn’t name Inseego’s new manufacturing partner or location, and company officials declined to provide details. “We anticipate that the manufacturing of products to be sold into the U.S. will be completely moved out of China prior to the end of this calendar year. In addition, we are working directly with the U.S. customs and border protection on tariff classification of our own products, which, if we are successful, will render the tariff issue completely moot from Inseego. In any event, we believe that completely moving out of China will, once accomplished, eliminate any future exposures to these tariffs.”
Interestingly, Inseego’s latest move isn’t the company’s first effort to cash in on the brewing trade war between China and the United States. Earlier this year Mondor said Inseego gained traction against rival device maker ZTE following the U.S. government’s action against that company. “Regarding the ban on Chinese vendors, we’re in the right place at the right time to fill the void. The phone has been ringing off the hook, so to speak, literally in the last couple of weeks. And make no mistake, the signal products are red, white and blue, designed and built in the U.S,” Mondor said in May, adding that he believed the “the position taken by the current administration is justified.”
The U.S. government has since rescinded its ban on ZTE products specifically, but the ongoing trade battle between the United States and China clearly has created an opportunity that Inseego is chasing.
To be clear, Trump’s Chinese tariffs are affecting a wide range of electronics companies, including those in the wireless industry. For example, Nokia warned in September that Trump's moves to levy tariffs on a wide variety of components from China could impede operators’ rollout of 5G network technology in the United States. And, as noted by Light Reading, Ruckus owner Arris—a major supplier to the cable industry—said the tariffs are imposing more costs on broadband devices and infrastructure gear, but that it was planning to move more of its device production and supply chain out of China.
Inseego—previously known as Novatel Wireless, maker of the MiFi brand of wireless hotspots—is a major supplier for Verizon’s new 5G Home service. Verizon’s service uses a 5G modem from Samsung on the outside or the inside of a home, depending on that customer’s distance from Verizon’s transmitter, as well as a router from suppliers Inseego and WNC.