J-Star Bets on America, Ditches China in Major Strategic Shift

TAICHUNG CITY, Taiwan – January 06, 2026 – In a decisive move signaling a broader shift in global manufacturing, Taiwan-based J-Star Holding Co., Ltd. (Nasdaq: YMAT) announced today its plan to substantially exit operations in China and pivot its resources toward expansion in the United States. The carbon fiber and composite solutions provider will establish its first U.S.-based automated production line, a strategy driven by what the company calls “increasing geopolitical uncertainty” and the challenging regulatory landscape in China.

This strategic realignment marks a significant turning point for the company, whose predecessor group was founded in 1970. J-Star will transition away from its traditional OEM manufacturing activities in China, writing off investments and dissolving a subsidiary, to focus on innovation, automation, and proximity to its key Western markets. The move places J-Star among a growing cohort of multinational firms, including giants like Canon and Mercedes-Benz, that are actively de-risking their supply chains by reducing their operational footprint in the People's Republic of China.

A Strategic Retreat from Geopolitical Headwinds

J-Star’s decision is a direct response to a complex and increasingly fraught global environment. For years, companies have navigated the choppy waters of US-China trade relations, marked by persistent tariffs that can reach as high as 25% on certain goods, directly impacting production costs. For a Taiwan-based firm like J-Star, these economic pressures are compounded by escalating geopolitical tensions across the Taiwan Strait, making operational stability a paramount concern.

Industry analysts note that over 60% of companies with Chinese operations now view geopolitical risk as a primary threat. This has fueled the widespread adoption of a “China + 1” strategy, where businesses maintain some presence in China while actively diversifying production to other countries to mitigate risk. J-Star’s move represents a more aggressive “China Exit” strategy, aiming to almost completely untangle its core manufacturing from the region.

The company will write off its minority equity investments in two Chinese entities, YMA Composite Materials (DG) Co., Ltd. and Forwell Sports Equipment Limited, valued at approximately US$1.7 million. Additionally, its wholly-owned but non-operational subsidiary, Bohong Technology Jiangsu Co., Ltd., will be dissolved. Only a single entity, Dongguan Changrong New Material Technology Co., Ltd., will be retained for limited trading purposes during the transition.

“This strategic realignment reflects our commitment to building a more resilient, innovation-driven, and globally competitive J-Star,” said Sam Van, the company's Chief Executive Officer, in a statement. “By reducing direct exposure to geopolitical risk and focusing our resources on automation, material science, and IP-driven growth, while being close to customers, we believe we are taking decisive steps to accelerate growth and enhance shareholder value.”

The American Bet: Automation and an 'Asset-Light' Future

At the heart of J-Star's new direction is a dual focus on American expansion and technological advancement. The plan to establish its first automated production line in the United States positions the company to capitalize on a resurgence in domestic manufacturing, heavily incentivized by federal policies like the CHIPS and Science Act and the Inflation Reduction Act. These initiatives offer significant tax credits and deductions for investments in advanced manufacturing facilities and new equipment, creating a fertile ground for companies looking to reshore or “friend-shore” their operations.

By embracing automation, J-Star is aligning with a critical industry trend. The production of high-performance carbon fiber composites—used in everything from electric bicycles and automotive parts to healthcare products—demands immense precision. Technologies like automated tape laying (ATL) and robotic fiber placement not only enhance efficiency and reduce labor costs but also improve consistency and quality, a crucial factor in safety-critical applications.

Concurrently, J-Star will adopt an “asset-light” operating model. Instead of owning every factory, the company will increasingly leverage third-party manufacturers, providing them with its proprietary raw materials and intellectual property. This model is designed to maintain competitive costs and improve working capital efficiency. However, it places immense pressure on quality control. In the world of composites, where microscopic flaws can lead to catastrophic failure, rigorous oversight—employing methods like ultrasonic inspection and Dynamic Mechanical Analysis (DMA)—will be essential to ensure that products made by partners meet J-Star’s exacting standards.

A High-Stakes Gamble for a Micro-Cap Player

From an investor's perspective, J-Star’s pivot is a high-stakes gamble. The company is a micro-cap player, with a market capitalization hovering under $9 million. Its stock (YMAT) has faced significant headwinds, falling over 87% in the past year, reflecting market volatility and investor uncertainty. The decision to write off $1.7 million in Chinese investments, while a relatively small sum, represents a tangible loss on the balance sheet.

Recent financial performance paints a mixed picture. While interim results for the first half of 2025 showed a 30.7% year-over-year revenue increase to $10.6 million, the company's gross margin declined, and profit after tax was a mere $5,000. Increased operating expenses tied to its IPO and R&D further squeezed profitability. This financial fragility makes the capital-intensive project of building a new U.S. factory a formidable challenge.

Despite these hurdles, management is framing the move as a necessary long-term investment in stability and growth. By extricating itself from the unpredictable Chinese market and aligning more closely with the U.S., its key market, J-Star aims to de-risk its profile and build a more predictable path to profitability. The strategy is designed to appeal to investors who prioritize long-term resilience over short-term gains, betting that a secure supply chain and a focus on high-value innovation will ultimately unlock greater shareholder value.

Navigating a Competitive and Evolving Market

J-Star is making its move within a booming global market for carbon fiber. Driven by demand for lightweight, high-strength materials in the aerospace, automotive (particularly electric vehicles), and wind energy sectors, the market is projected to grow to nearly $7 billion by 2030. This robust demand creates significant opportunity, but also attracts formidable competition.

J-Star is not the only company eyeing American shores. Industry giants like Hexcel Corporation and Teijin Limited have recently announced major investments to expand their own carbon fiber production capacity in the United States, backed by far greater financial resources. J-Star will be a smaller fish in a rapidly growing pond, competing with established players for talent, resources, and market share.

To succeed, the company must effectively leverage its 50 years of expertise in material science and its focus on proprietary design. The shift away from low-margin OEM work toward an IP-driven model is crucial. By concentrating on innovation in advanced materials and automated production, J-Star hopes to carve out a niche as a high-value partner, rather than just another supplier. This strategic pivot, born from geopolitical necessity, is ultimately a bet on its own ability to innovate faster and smarter in a new industrial landscape.