July 6, 2019 7:57:01 pm
HP Inc and Dell Technologies Inc plan to move as much as 30 per cent of their notebook production away from China, the Nikkei cited anonymous sources as saying, as global technology giants try to avoid escalating tariffs on US-bound goods.
Microsoft Corp, Amazon.com Inc, Sony Corp and Nintendo Co are also looking to move some of their game console and smart speaker manufacturing away from the country, the Nikkei Asian Review cited those sources as saying. Other companies including Lenovo Group Ltd, Acer Inc and Asustek Computer Inc are evaluating their options, the media outlet reported.
Corporations foreign and domestic are seeking to pivot production away from China amid US President Donald Trump’s efforts to use punitive tariffs to negotiate friendlier trade terms. While many are drawing up contingency plans, shifting select assembly operations or exploring alternative manufacturing venues, few have moved output in significant amounts and China’s status as the world’s production base for electronics is unlikely to diminish anytime soon. Alphabet Inc’s Google has already shifted much of its production of US-bound motherboards to Taiwan, averting a 25 per cent tariff, Bloomberg News reported last month.
“HP shares industry concerns that broad-based tariffs harm consumers by increasing the cost of electronics,” a spokesman said in a statement. “We are actively monitoring the situation and will continue to work with government officials to advocate for the best interests of customers, partners and consumers.” A Dell spokesman noted that it has a global supply chain and said the company continuously explores “alternative sourcing, production, and logistics strategies to best serve our customers.”
A Lenovo representative said the Nikkei report was inaccurate, without elaborating. An Acer spokesman referred to CEO Jason Chen’s comment in May that his company planned to finalize a production plan for US-bound products later this year and is open to all options. Representatives for Microsoft, Amazon, Sony, Nintendo weren’t immediately available for comment outside of normal business hours. Asustek spokesman Nick Wu declined to comment.
US companies, long accustomed to using China as the world’s workshop, are exploring alternatives as tensions run high and Beijing shows a willingness to clamp down on foreign firms within its own borders. It’s a shift that may herald a broader, long-term trend as Beijing and Washington continue to spar over everything from market access to trade.
The Taiwanese contract manufacturers that make most of the world’s electronics, including Apple Inc-partner Foxconn Technology Group, have since 2018 accelerated the shift at their clients’ behest. Foxconn said last month it has enough capacity to make all iPhones bound for the US outside of China if necessary, although Apple has so far not asked for such a shift.
The trade war threatens to disrupt a complex global supply chain involving many countries beyond just China and the US Many components that go into devices aren’t made in the US, despite being designed there. A phone chip designed by Apple may come out of a factory in Taiwan, then be packaged (a process that prepares it for integration into a circuit) somewhere else, before being shipped to China for assembly into an iPhone.
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