Chin Yao Advisory
Supply Chain & Partner Due Diligence

Thailand's Advanced Materials Supply Chain: How Taiwanese Materials, Component and Equipment Suppliers Should Assess the Opportunity

By

When a Taiwanese materials, component or equipment supplier wants to sell into a manufacturer in Thailand, the first question I usually hear is: "Do we need to build a factory there first?"

In most cases, not yet. The first thing to work out is what the customer in Thailand needs you to do. Whether to build a factory is the last decision, not the first.

On 15 October 2026 the BOI published figures for 2023 to the first half of 2026: 35 applications for investment promotion in advanced materials, nanomaterials, specialty fibres and related activities, with more than 23.5 billion baht of planned investment. The products include multilayer ceramic capacitors (MLCCs), graphite films for heat management, ceramic materials, battery and fuel cell materials, and glass fibre fabric for PCBs.

These are applications, not factories already in production. Thailand's advanced materials base is still early, and many materials cannot yet be bought locally.

My view is simple: because it is early, now is the time to move, and to move quickly. Once the supply chain matures, the manufacturers will already have suppliers who arrived first and passed their qualification. Arriving then means fighting for orders someone else already holds.

First: find out what the customer in Thailand needs from you

By "manufacturer" I mean a company that integrates, assembles or builds systems in Thailand. You should be able to say which process and which product your item goes into, and who decides the purchase.

Four questions to answer first:

  • Who decides the purchase? Can the Thai plant buy on its own, or does it need approval from headquarters?
  • How do you become an approved supplier? Registration, samples, testing, audits, or a fresh qualification for a new plant?
  • What does delivery require? Can shipments from Taiwan meet the lead times, batch sizes, buffer stock and payment terms?
  • Who turns up when something goes wrong? When there is a quality or equipment problem, how fast does the customer expect a response, and how fast someone on site?

Many Taiwanese suppliers think they are selling materials or machines. In Thailand the customer often cares about something else: where your people are when there is a problem. A materials supplier needs to handle samples and failure analysis. An equipment supplier needs to handle installation, maintenance and repair. These answers decide what people and functions you need in Thailand.

Second: decide what the Thai company will do, then decide on a factory

I have helped Taiwanese trading companies set up fully foreign-owned companies in Thailand many times. In my experience these are far simpler than factories: no plant to build, no production line, no process or facility engineering.

Simpler does not mean you can set one up any way you like. A foreign company trading in Thailand runs into the Foreign Business Act (FBA). Retail and wholesale are both restricted activities on List 3. A foreign retailer with total capital under 100 million baht, or under 20 million baht per store, and a foreign wholesaler with under 100 million baht per store, need a Foreign Business Licence first. Technical services may also fall under "other service businesses".

Without enough capital or another route, a fully foreign-owned company cannot simply start trading. That is why the BOI's non-manufacturing categories, IPO, TISO and IBC, matter so much to traders and equipment suppliers. Once the activity is approved by the BOI, the company can obtain a Foreign Business Certificate from the Department of Business Development instead of going through the licence review.

The company also does not have to do everything at once. A steadier path is staged:

  1. Start with customer contact and technical response.
  2. Once there is steady replenishment demand, look at warehousing.
  3. Plan a production line only when local manufacturing has a commercial case.

Some companies are right to build a plant from the start. What matters is the job the Thai entity has to do. There is no single path for everyone.

Third: choose IPO, TISO or IBC by the business you actually run

The three names sound alike. The businesses they fit are quite different:

Category Fits Limits to know first
IPO (International Procurement Office) Buying raw materials, parts and components for manufacturers or dealers, for domestic wholesale or export Raw materials and components only, not finished products or machinery; a local warehouse with real-time inventory software; no manufacturing or assembly
TISO (Trade and Investment Support Office) Technical and engineering support; importing machinery for sale, plus training, installation, maintenance, repair and calibration Non-tax incentives only; operate within the approved activities
IBC (International Business Center) A regional centre serving associated companies, which may also trade Pure trading with outside parties does not qualify; income tax incentives need a separate application to the Revenue Department

The common mistake is picking the wrong one. An equipment supplier treats its machines as parts and applies for IPO, but IPO excludes machinery. If you sell machines and also install and maintain them, look at TISO first. If you only want to trade and have no associated companies to serve, IBC is the wrong fit.

The category should follow the business, not the other way round. Be clear about what you sell, to whom, how you deliver and what services you provide. Then choose the scheme and the company structure.

Part of the BOI's own explanatory page still reflects earlier years. Check capital, headcount and other thresholds against the current announcements and activity list before you apply.

Why speed matters

Between the first visit and the first regular order there are samples, tests, audits and price negotiations. Each step takes time, and most of that time is not yours to control. Setting up the company is only one piece.

Moving quickly does not mean spending on a factory right away. It means contacting target customers now, learning about new projects, arranging tests and building a local response capability. Set a condition for each next step: send samples once there is a clear need, hold stock once delivery requirements are confirmed, build a team once ongoing service demand is clear. Let investment grow with the evidence customers give you.

Thai capability varies widely by material and support service. That is exactly why going in now gives you a chance to find a gap you can fill.

On the day a customer asks for supply, what you need is a credible delivery plan, not a market report that is optimistic about Thailand. The order is simple: what the customer needs → what the Thai company does → which structure → and only then whether to build a factory.

Legal basis

  • Foreign Business Act B.E. 2542, List 3: retail, wholesale, other service businesses
  • BOI promotion categories: IPO, TISO, IBC

Sources

Related articles

Information checked on 16 October 2026. This article is a general explanation. BOI category conditions and Foreign Business Act rules may change, and each case has to be assessed on its actual business, the current BOI announcements and the decisions of the relevant authorities.

Questions about your own case? Connect with the author on LinkedIn.

Back to all articles