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Uncertainty Continues To Haunt Tech Majors As Amazon, Microsoft, HP Among Others Plan To Shift Production Out Of China
US President Donald Trump and Chinese President Xi Jinping. (via Twitter)
Uncertainty continues to get the better of tech majors like Amazon, Microsoft, Dell and HP among others as they look to diversify their production lines in wake of the US-China tariff war, Nikkei has reported.
Notwithstanding the latest agreement between the United States (US) and China to hold off on new tariffs, big tech continued to look for options to shift production out of China, uncertainty and rising costs in China being the factors behind the push.
Tech giants have been at the receiving end of the ensuing tariff war with North American markets making up the home base for most of these companies. As an example, personal computing bigwigs HP and Dell have 40 per cent and 47 per cent of their laptop shipments landing up in North America respectively.
"The industry consensus is to move an average of some 30 per cent of production out of China depending on how important the US market is. Everyone needs to come up with a plan," a supply chain executive quoted by Nikkei said. “Apple is really the very last and the slowest to start formulating plans, while everyone else out there is much more aggressive" the executive added.
Dell already has a ‘pilot run’ in place in Taiwan, Vietnam and Philippines according to the report while HP is exploring Taiwan and Thailand as possible options for production.
For Amazon and Microsoft, gaming consoles and smart speakers are the major causes of concern. While Amazon is evaluating Vietnam as an option for manufacturing its Echo speakers, Microsoft is looking at Thailand and Indonesia for producing its Xbox consoles and Cortana smart speakers.
Commenting on the development, Taiwan Institute of Economic Research’s Darson Chiu, an economist specialising in trade said “There is no turning back, and it is not only about tariffs but also about reducing risks for the long term. Southeast Asian countries and India will together become new competitive hubs in coming years for electronics production."
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