Global consumer electronics giants HP, Dell, Microsoft and Amazon maybe looking to move some of their hardware production out of China in lieu of the ongoing trade war with the US. While HP and Dell are looking to shift up to 30 per cent of their notebook computer production out of China, Microsoft and Amazon are also planning to move some of their Xbox console and Echo smart speaker manufacturing out of the country, according to a Nikkei report.
The decision to move manufacturing out of China comes in response to a trade war that has seen the US levy up to 25 per cent tariff on nearly $200 billion worth of goods imported from the country – in a bid to promote domestic manufacturing. While the tech industry has remained unperturbed mostly - so far - things could change in the future. Newer tariffs could mean increased cost of production which would invariably be passed on to the consumers – as also entail in slimmer profit margins for brands like HP, Dell, Microsoft and Amazon. The report says even companies like Lenovo and Asus, as well as Apple, are in line to move manufacturing out of China for the same reason.
While HP is looking at Thailand and Taiwan as alternatives, Dell has “already started a pilot run of notebook production in Taiwan, Vietnam and the Philippines.” Amazon may similarly move production to Vietnam, and Microsoft is looking at Thailand and Indonesia as possible relocation regions.
"The industry consensus is to move an average of some 30 per cent of production out of China depending on how important the U.S. market is... Everyone needs to come up with a plan," a supply chain executive was quoted in the report as saying.
The recently concluded G20 summit raised hope that the two parties are in-sync to find some sort of middle ground – the summit also ended on a positive note with President Trump giving a ‘verbal’ go-ahead to US companies to start selling products to Huawei – but as things started to sink in, one thing became clear – things won’t be easy. Which is possibly why giants like HP, Dell, Microsoft and Amazon maybe looking at a plan-B to ensure their business isn’t affected. The move will be a big blow for China though, that has remined the world’s largest producer of computers and smartphones for over a decade now.