Onshoring, Reshoring, China +1: Modern Electronics Manufacturing Strategy

Contents

A New Era in Electronics Manufacturing Strategy
Why Onshoring and Reshoring Are Back in Focus
The Rise of Near-Shoring: Mexico and Latin America
China +1 Strategy: Beyond Geopolitics
Tariff Impacts and Supply Chain Risk Recalibration
The Imperative to “Build Where You Ship”
Total Landed Cost: Real Cost Modeling, Not Just Unit Price
Conclusion: Action Steps for OEM Supply Chain Leaders

A New Era in Electronics Manufacturing Strategy

OEM supply chain managers and C-suite leaders in electronics manufacturing face a market that demands speed, resilience, and cost clarity. The landscape has shifted from a singular focus on low-cost offshore builds toward a multi-faceted approach that prioritizes agility, risk management, and real total cost control.

The old model of defaulting to low-cost offshore builds is no longer aligned with the realities of tariff impacts, geopolitical shifts, and the total landed cost of your products. Trade tensions continue to escalate between major economies, with new and evolving tariffs adding 8–12% (and more) on key electronics categories. Geopolitical instability, export controls on critical semiconductors, and rising labor costs in Asia further erode the unit price advantages that once drove offshore strategies.

Meanwhile, customers expect faster delivery times and the flexibility to adjust orders without extended delays or excess carrying costs. The growing pressure to align supply chains with ESG goals and carbon reduction targets also challenges the traditional offshore model. Long supply chains tied to distant manufacturing hubs create additional risks, from port congestion to rising shipping costs, leaving OEMs exposed during demand swings and disruptions.

Today, onshoring, reshoring, near-shoring, and China + 1 strategies are essential levers in your manufacturing strategy to protect market share and improve responsiveness to customer demand. Onshoring and reshoring to the U.S. enable electronics manufacturers to build where they ship, reduce lead times, lower transportation emissions, and improve alignment with customer demand signals.

These strategies are not merely reactive but represent a proactive stance toward building a resilient, demand-driven supply chain capable of thriving amid uncertainty. By embracing this new era of supply chain strategy, OEM leaders position their operations to adapt to market shifts, reduce the hidden costs of complexity, and strengthen customer loyalty through reliable delivery and quality.

The companies that successfully integrate these approaches into their manufacturing strategy will gain a competitive edge.

EBOOK – The Threat To OEM Success: Price & Lead-Time

Why Onshoring and Reshoring Are Back in Focus

The Reshoring Initiative reports that reshoring and foreign direct investment (FDI) job announcements in the U.S. exceeded 400,000 in 2024, marking a 15% increase over 2023 and the continuation of a ten-year upward trend. Electronics manufacturers are contributing significantly to this momentum as lead times, IP protection, and supply chain control become non-negotiable in an environment defined by global uncertainty.

Previously, reshoring efforts were often dismissed as driven by patriotism or political optics alone. Today, reshoring is fundamentally about securing capacity to serve customers without disruption while controlling total cost in an environment of tariff volatility, labor cost escalations overseas, and mounting geopolitical risks.

Electronics OEMs now recognize the tangible advantages reshoring offers: reduced transit times, fewer layers of customs complexity, and tighter alignment with end-customer demand signals. It enables faster engineering change implementation and smoother collaboration with domestic suppliers, enhancing agility in product launches and revisions.

Additionally, reshoring supports quality improvement initiatives, reduces scrap and rework hidden in offshore operations, and helps protect valuable intellectual property in sectors where design and manufacturing are closely integrated. With sustainability rising as a corporate priority, reshoring further reduces Scope 3 emissions, aligning operational practices with ESG commitments.

As U.S. and North American demand continues to grow, reshoring is becoming a strategic investment in resilience, market responsiveness, and long-term competitive advantage for electronics manufacturers.

The Rise of Near-Shoring: Mexico and Latin America

Near-shoring to Mexico and Latin America has accelerated as OEMs seek shorter lead times and reduced freight costs, but it should be viewed as a complement to, not a replacement for, U.S.-based manufacturing. Proximity to U.S. markets does bring benefits, including lower shipping costs and faster transit times compared to offshore production in Asia. Near-shoring also offers trade advantages under USMCA, simplifying cross-border transactions while providing moderate labor cost advantages in specific categories.

However, while near-shoring can reduce geopolitical risks compared to distant offshore operations, U.S.-based manufacturing remains the gold standard for quality control, engineering collaboration, and customer responsiveness in the electronics sector. Building in the U.S. allows for immediate access to skilled labor, advanced manufacturing technologies, and seamless coordination between design and production, all of which are critical for complex electronics requiring rapid iteration.

Near-shoring may offer a hybrid strategy for overflow or lower-complexity assemblies, but manufacturing where you sell—within the U.S.—offers unmatched control over IP protection, quality, and responsiveness while supporting ESG goals through reduced emissions and lower logistics dependency.

For OEMs, near-shoring can play a strategic role within a larger framework that prioritizes U.S.-based manufacturing as the foundation for resilience, flexibility, and total landed cost optimization in a rapidly evolving electronics market.

China +1 Strategy: Beyond Geopolitics

The China + 1 strategy—diversifying supply chains while maintaining a presence in China—has become mainstream as OEMs seek to reduce risk while balancing cost and capacity realities. This approach is no longer solely about responding to geopolitical headlines; it is a calculated operational strategy for OEMs looking to protect business continuity and customer commitments.

Rising labor costs in China, with manufacturing wages increasing ~5% annually since 2020, have eroded the historical cost advantage for many electronics categories. Geopolitical risk, including evolving export controls on semiconductors and advanced electronics, adds complexity to sourcing critical components. Tariff impacts continue to affect sensitive electronics categories, adding 8–12% effective cost increases depending on product classification.

Yet, for many electronics manufacturers, China remains a key market and a necessary part of their global supply chain. Instead of a binary “leave or stay” decision, OEM leaders are now focusing on building a portfolio of manufacturing geographies that balance volume, cost, and resilience while ensuring continuity in high-demand markets.

Within this China + 1 strategy, U.S.-based manufacturing often serves as the stability anchor, providing IP protection, rapid iteration capabilities, and end-market proximity. By pairing domestic production with carefully selected alternative locations in Southeast Asia or near-shoring in North America, OEMs can strategically reduce single-point-of-failure risks while maintaining global competitiveness in cost and capacity.

Tariff Impacts and Supply Chain Risk Recalibration

Tariffs continue to affect critical electronics components and finished goods, with recent data showing effective landed costs increasing by 8–12% on average due to new U.S.-China tariffs implemented in late 2024. These tariffs have had ripple effects across categories such as printed circuit boards, semiconductor devices, and assemblies, eroding the apparent savings of offshore sourcing when recalculated through the lens of total landed cost.

Yet tariffs are only one piece of the risk landscape confronting electronics OEMs. Supply chain risk recalibration is now a strategic priority, driving sourcing leaders to reassess supplier financial stability, regional political volatility, and single points of failure when determining where to manufacture. Disruptions—from geopolitical flashpoints to natural disasters and freight congestion—have demonstrated how quickly a seemingly cost-effective sourcing strategy can become a liability.

Leaders are mapping supply chain dependencies, evaluating tier-two and tier-three supplier health, and incorporating risk scoring in sourcing decisions to build resilience. As these recalibrations take place, many OEMs are finding that U.S.-based manufacturing can mitigate multiple layers of risk simultaneously, from tariff exposure to quality assurance and responsiveness during demand surges.

By evaluating the true cost of tariffs in conjunction with supply chain vulnerabilities, OEMs position themselves to reduce hidden expenses, improve agility, and protect customer commitments in an increasingly complex global market.

The Imperative to “Build Where You Ship”

The strategy to “build where you ship” is becoming a cornerstone of advanced supply chain design for electronics OEMs seeking resilience, agility, and true cost optimization. By aligning manufacturing with the regions where products are consumed, companies gain multiple operational and strategic advantages.

First, transit times are significantly reduced, improving cash-to-cash cycles and lowering the need for excessive in-transit inventory buffers. This shortens lead times and enables faster response to demand changes, new product introductions, or engineering revisions—critical factors in electronics markets where technology evolves rapidly.

Second, building near the customer reduces the carbon footprint associated with long-haul shipping, supporting corporate sustainability goals and ESG reporting commitments. Companies can demonstrate meaningful Scope 3 emissions reductions while also improving energy efficiency in warehousing and distribution.

Third, the strategy reduces dependency on container availability, volatile shipping lanes, and fluctuating freight costs, which have become significant risk factors in recent years. The ability to avoid port congestion and international customs delays creates a smoother, more predictable supply chain.

For electronics OEMs, aligning final assembly and test near the end customer also improves quality control and flexibility. It allows for last-minute configuration, regional compliance testing, and localized packaging, reducing returns and increasing customer satisfaction.

“Build where you ship” is not simply a logistics tactic—it is a strategic investment in customer-centric operations, market responsiveness, and total landed cost clarity in a competitive environment.

Total Landed Cost: Real Cost Modeling, Not Just Unit Price

Total landed cost analysis is a critical tool for electronics OEMs seeking to make informed, resilient sourcing and manufacturing decisions. It moves beyond the oversimplified focus on unit manufacturing cost to capture the full economic reality of getting a product from factory floor to customer hands.

Total landed cost analysis incorporates unit manufacturing cost, which remains a core metric, but layers in shipping and logistics costs that have grown significantly with rising global freight rates and surcharges. It includes tariff impacts, which can add 8–12% or more to product costs, eroding apparent savings from lower unit pricing overseas.

Equally important are quality costs, including rework, scrap, and returns, which often increase with distance, communication barriers, and complex handoffs in offshore environments. These hidden costs can quietly drain margins while damaging customer relationships.

Additionally, time-based opportunity costs are a critical but frequently overlooked component of total landed cost. Longer lead times can delay revenue capture, slow down inventory turns, and reduce flexibility to respond to market shifts or customer requests. The inability to pivot quickly can result in lost sales, excess inventory, and missed market opportunities.

By evaluating sourcing decisions through a total landed cost lens, OEM leaders gain true cost clarity and often discover that near-shoring or onshoring provides a competitive edge when accounting for these layered factors, rather than focusing solely on unit price.

Conclusion: Action Steps for OEM Supply Chain Leaders

In today’s modern environment, your electronics manufacturing strategy requires a deliberate, data-driven approach to onshoring, reshoring, near-shoring, and China + 1 to address tariff impacts, supply chain risk, and total landed cost.

Reassess your total landed cost using realistic shipping, tariff, and quality metrics.
Explore “build where you ship” opportunities to reduce lead time and improve customer satisfaction.
Align reshoring efforts with your sustainability goals to strengthen ESG positioning.

Versa Electronics can help you navigate these decisions while maintaining the operational excellence you require.