(Aug 16): Even the unseasonable downpour couldn’t dampen the spirits of the executives and officials gathered on the Indonesian island of Batam to cut the ribbon on a new Pegatron Corp factory. The men exchanged jokes as they took shelter under a white canopy, and when company vice chairman Jason Cheng pledged to hire hundreds of locals, the assembled audience erupted in applause.

This low-key July ceremony to launch a manufacturing outpost marked a critical first step into Southeast Asia for one of Apple Inc’s most important suppliers. It also encapsulates a fundamental move of electronics production, set in motion by the escalating US-China trade war, that may hurt the world’s No. 2 economy while enriching Southeast Asia and beyond.

“Pegatron, and many more to come, is an opportunity,” Edy Putra Irawady, head of a local agency charged with enticing capital, told the crowd. “Batam has prepared various incentives to chase the opportunity and attract more investment.” Irawady is one of many making preparations for the most profound shift in global manufacturing since the advent of the made-in-China model in the 1980s: its potential dismantling.

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