Tech
US Tech Majors Microsoft And AWS Eye Shifting Production From China: Report
Microsoft Logo (Representative Image) (Photo by Drew Angerer/Getty Images)
Microsoft aims to produce the majority of its new products outside of China as early as next year, while Amazon Web Services is expanding its supply chain shift down to the component level, Nikkei Asia reported, citing sources.
The move represents a significant escalation in the US technology sector's efforts to diversify manufacturing operations amid ongoing geopolitical tensions and trade uncertainties between the United States and China.
Microsoft has reportedly asked multiple suppliers to help prepare "out of China" production for its Surface laptop computers and data center servers, including key components and assembly, starting next year.
The company ships a total of about 4 million Surface notebooks and tablets a year.
Meanwhile, AWS is also among the US companies adopting non-China production, particularly for production of its sensitive AI data center servers.
According to the report, AWS has even looked at the feasibility of reducing its sourcing from longtime PCB supplier SYE, even though the Chinese company has production options outside of China.
The strategic shift by these technology giants could present substantial opportunities for India, which has already demonstrated its manufacturing capabilities through Apple's successful production expansion in the country.
Apple now produces billions of dollars worth of iPhones in India, with 20 per cent of its global iPhone output coming from the country.
However, India faces considerable competition from Southeast Asian nations, which technology companies increasingly view as viable alternatives to Chinese manufacturing.
Vietnam is often cited as one of the fastest-growing manufacturing hubs in Asia, offering low labour costs and a growing skilled workforce.
Countries including Thailand, Indonesia and the Philippines are also competing for investment from multinational corporations seeking to reduce their dependence on China.
India's path to capturing a larger share of this manufacturing shift faces several obstacles.
India needs to import majority of raw materials, including critical minerals, to manufacture items such as smartphones and chips.
A significant skill gap exists in the Indian manufacturing industry, where the demand for skilled workers far exceeds supply, as educational institutions often do not equip students with the necessary training.
Despite these challenges, India has made significant strides in attracting technology manufacturing.
The government's Production Linked Incentive scheme is boosting domestic manufacturing and attracts foreign investment.
The country's large domestic market and growing economy with Infrastructural improvements continue to appeal to multinational companies.
Meanwhile, Southeast Asian nations have been investing heavily in infrastructure and offering competitive advantages to secure manufacturing contracts.
