Microsoft, HP, Dell, Amazon Looking to Move Hardware Production Out of China

Posted on July 3, 2019 by Mehedi Hassan in Amazon, Apple, Google, Hardware, Microsoft with 30 Comments

Source: Getty Images

With the ongoing trade conflict between the United States and China, major tech companies are planning to move their production out of China. Although there’s been a truce between both the nations, with the United States notably allowing China’s Huawei to once again do business with suppliers in the country, major tech companies are still concerned over the growing uncertainty.

Nikkei is reporting that HP, Dell, Microsoft, Google, Amazon, Sony, and Nintendo are planning to move parts of their hardware production from out of China to other Southeast Asian countries:

  • HP is planning to move around 20% to 30% of its production out of China to a new supply chain in Thailand or Taiwan by the end of the quarter.
  • Dell has already started a pilot run of notebook production in Taiwan, Vietnam, and the Phillippines, with the company also planning to move around 30% of its production out of China.
  • Amazon and Nintendo are looking to move parts of the production of their products like Echo speakers, Kindle, and the Nintendo Switch to Vietnam.
  • Microsoft is looking at Thailand and Indonesia as alternatives, too.
  • Lenovo, Acer, and Asus are also evaluating plans to move parts of their production out of China.

Following the tariff of 25% on imports from China to the United States placed by the U.S. government, there’s been a ton of uncertainties for businesses in both the economies. The growing threat of further tariffs has pushed U.S. tech companies to look at other nations as alternatives to China, with companies like Apple and Foxconn already starting mass-production of the iPhone in countries like India.

The recent truce is obviously promising, but that doesn’t necessarily eliminate the chances of any future conflicts between the countries. Thus, tech companies are trying to secure a safe future by thinking long-term and moving away from China. But with China’s economy relying heavily on the manufacturing of phones and computers, it’s probably going to take a major hit.

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Comments (30)

30 responses to “Microsoft, HP, Dell, Amazon Looking to Move Hardware Production Out of China”

  1. lvthunder

    I think it's a good thing for these companies to diversify where they make their products.

  2. hallmanac

    I'm not in the "bring it back to the USA" camp, per se, but moving some of that out of China is a good thing. I worked in the Aluminum industry years ago and witnessed the way the Chinese government structured deals over there and it's against just about everything that I believe makes for a "free economy". Not to mention the human rights issues they perpetuate.

    That's not to say that other countries in that part of the world are much better but hopefully this shakes things up enough to cause some ripples of change for the better.

  3. glenn8878

    Having technology suppliers outside of China helps our defense. China has too much power to sabotage our foreign policy. More goods needs to be assembled in the USA ultimately.

    • wright_is

      In reply to glenn8878:

      The first part is wrong, the second part is correct.

      Having any manufacturing abroad is a threat to national security. But these days most big companies are supranational, which means they need to diversify themselves as much as possible to not be beholden to any government.

  4. wright_is

    But, but, but this was supposed to put pressure on them to move manufacturing to the USA!

    I have an image of Trump in the Whitehouse stamping his foot Rumpelstiltskin-style through the Oval Office floor.

  5. red.radar

    This is trumps crowning Achievement. He is forcing companies to diversify supply chains and with tariffs he found a new way to regulate inflation that doesn’t cripple the poor.

  6. dontbe evil

    Except apple of course

  7. PeterC

    It takes years to move production lines and component supply lines successfully. Some capacity is always possible but not much in terms of percentages compared to existing manufacture numbers...

  8. skane2600

    The key point is that production will continue to be done in places with cheap labor costs and no jobs will be brought back to the headquarter countries.

    • Pbike908

      In reply to skane2600:

      Yep, every action has a reaction as they say. I do have to give Trump credit for finally getting the attention of the Chinese. It's too early to tell how it will all play out, however, it appears that none of these factories are coming back to the U.S.

      • skane2600

        In reply to Pbike908:

        I don't see any value in "getting the attention of the Chinese". Of course getting attention has been Trumps "business" for many years even if his actual businesses suffer as a result.

        • Stooks

          In reply to skane2600:

          Loooooooong before Trump the Chinese trade deals needed to be addressed. After WWII China got sweet deals because of many reasons, war damage, economic standings compared to the US etc...etc...etc.

          About the time of Bush Sr, these trade deals should have been redone as China had climbed way past the reasons the deals existed.

          Trump did it, like him or not, but he pushed this forward, something that needed to be addressed at least 10 years ago.

        • waethorn

          In reply to skane2600:

          Then you don't know how currency manipulation affects global trade.

        • lvthunder

          In reply to skane2600:

          So you are fine with the Chinese ripping off US companies and forcing them to hand over IP? You are also fine with them manipulating their currency to keep it cheap to make stuff there? You are also fine with them hacking our companies all the time? I think it's time someone pushed back against all of that.

          • AnOldAmigaUser

            In reply to lvthunder:

            Once someone is manufacturing the stuff, the IP is out of the bag so to speak. Agree it would be nice if the Chinese would sign on to international norms of IP protection, but the companies doing business there know they are giving up IP for cheap manufacturing.

            Hacking of business and governments goes on all the time in all different directions. Yes the Chinese are egregious, but are you saying that we do not do it as well? Connecting everything sounded like a wonderful utopian idea, but it ended up as the dystopian reality we live with today. I am very intrigued by Russia's plan to disconnect from the internet. Perhaps we should be planning something similar.

            With regard to currency manipulation, the problem is that it is their currency, and in a planned economy, they get to say what it is worth.

            Pushing back at China is a good idea, but doing it alone is a fool's errand. If someone had learned to play well with others in kindergarten, perhaps our allies would have joined in the effort.

          • markld

            In reply to lvthunder:

            I agree with you and it continues to amaze me how others continue to pretend those facts you expressed don't exist.

          • skane2600

            In reply to lvthunder:

            Well, thanks for making up my opinions for me.

            • lvthunder

              In reply to skane2600:

              Well that is the value in "getting the attention of the Chinese" that you don't see.

              • skane2600

                In reply to lvthunder:

                Huh? You simply strawmanned me with positions I didn't take. Nothing you said addressed the question of the value of getting China's attention. You indirectly stated your concerns/beliefs about China, but to the degree that they are accurate, the value would lie in actually stopping those practices, not merely getting China's attention. Other than a trade war Trump started, nothing has changed.

      • jimchamplin

        In reply to Pbike908:

        Of course not, and Drumpf knows that. He fully expects his rich CEO friends not to actually create jobs, but instead to keep filling GOP campaign coffers with the extra scratch they get by wringing us little guys harder and harder.

  9. martinm

    This government won't be happy till its crucified all of us with its stupid xenophobia, ruining our relationships and business opportunities. I bet China is working hard on its own OS now, you can't blame them.

    The jobs are not even coming back to the USA.