Wed, Jul 03, 2019

Amazon, Microsoft, and Google plot to pull product manufacturing out of China, deepening the cold war engulfing tech

@BusinessInsider

The US tech giants Google, Amazon, Microsoft, Dell, and HP are all gearing up to start shifting production away from China amid the trade war, Nikkei Asian Review reports.

Citing multiple sources, Nikkei reports that the five companies have been scouting various other Asian countries as possible new homes for electronics production.

This is the latest chapter in the tech cold war that has snowballed substantially amid President Donald Trump's trade war with China.

Nikkei reported last month that Apple was seriously considering moving 15% to 30% of its iPhone production out of China, an early sign US companies wanted to reduce their exposure to the country.

Google, Amazon, and Microsoft Game consoles and smart speakers are the primary concern for the Silicon Valley giants Google, Amazon, and Microsoft — along with Sony and Nintendo.

Amazon is looking at moving production of its e-readers and Echo smart speakers to Vietnam, Nikkei said. Microsoft is weighing up Thailand and Indonesia, presumably for production of the Xbox as well as its lesser-known Cortana speaker.

Nikkei gave no details about where Google might consider moving production of its Google Home smart speakers.

US tariffs pose an existential threat to video game consoles. Last week, Sony, Microsoft, and Nintendo wrote a joint letter to the US government asking that game consoles be left off any tariff lists because of the "disproportionate harm" tariffs would cause to US consumers and business.

Dell and HP

For Dell and HP, notebook computers are the main area where the companies are said to be looking to move production. The two companies shipped a combined 70 million notebook devices last year, according to Nikkei, most of which were made in China.

Dell is already trialing notebook production in Taiwan, Vietnam, and the Philippines, Nikkei said, citing two people familiar with the plan.

Two sources also told Nikkei that HP was looking to shift 20% to 30% of production out of the country and was considering Thailand and Taiwan as alternatives. One source said the changes could begin as early as late July but were still liable to change.

Google, Amazon, Dell, and HP were not immediately available for comment when contacted by Business Insider. Microsoft declined to comment.

Signup and get unlimited access!

Create an account now