President Donald Trump called for a tariff on Chinese-produced goods back in May, and the Chinese government threatened to put a tariff on US goods in retaliation. At the G20 summit in Japan last week, Trump made interesting comments on partially reversing the Huawei ban, and a possible truce in the ongoing trade war. According to a report by Nikkei Asian Review, big tech isn’t taking any chances though, and is planning to shift a sizable part of their manufacturing outside of China.
The tariffs imposed on phones, laptops and gaming consoles could see prices rise considerably for people in the U.S. but what’s making tech giants examine alternatives is the problem of rising manufacturing costs in China. Dell is said to have started a ‘pilot run’ of notebook production for what is essentially a plan to move 30 percent of it to greener pastures. HP is reportedly looking at anywhere between 20 and 30 percent, and the two companies combined account for some 70 million notebooks shipped in 2018, a lot of them made in China.
But moving supply chains out of China doesn’t mean making new jobs in the United States. The plans, according to the report, will move production to Taiwan and parts of Southeast Asia, including Thailand, Taiwan, Vietnam and the Philippines.
HP’s plans could move 20 to 30 percent of production to a new supply chain in either Thailand or Taiwan, possibly as soon as September, though that’s apparently not set in stone. Dell has reportedly begun a “pilot run” of laptops in Taiwan, the Phillpines and Vietnam, with sources claiming the company was not only looking to avoid the trade war, but already dealing with increasing costs in China and a lack of labor.
Amazon and Nintendo are both looking at Vietnam as a potential new base for supply chains, and Microsoft is reportedly looking at Thailand and Indonesia.
Alphabet’s Google has already shifted much of its production of US-bound motherboards to Taiwan, averting a 25 per cent tariff which we reported last month.
