Beijing, August 7
America's leading PC maker, HP is looking to revoke more than half of computer production away from China, and is also planning to set up a "backup" design hub in Singapore in an attempt to reduce geopolitical risks around China and Taiwan, Nikkei Asia reported.
These plans are the most aggressive move made by the PC maker, involving the revocation of its supply chains away from Asia's biggest economy. The company, which currently makes its PCs in China, is conducting discussions with suppliers about the matter.
The Nikkei Asia reported, citing sources, that HP has set its sights on achieving its target in two to three years. One such source said the company has set internal targets of making 70 per cent of its notebooks outside China.
A probable destination for the shift in production is Thailand.
Notably, five suppliers of the tech company are already building new manufacturing units and warehouses in Thailand. Additionally, two of such suppliers have been increasing their capacity there since the beginning of the year at HP's request.
"It is certain that HP is betting big on building a production hub in Thailand. We have other Southeast Asian facilities to support the client, but they said it is not efficient enough, so we're building a new factory in Thailand now, as requested." one of the executives in HP's supply chains said.
An executive working for another supplier of HP welcomed the move, stating, "We were worried about not having enough orders to fully use our Thailand facility, but since earlier this year, we've been receiving more requests from HP to build components locally. Our business in Thailand is quite busy now."
In 2023, HP shipped around 52 million PCs. Its accelerating supply chain shift away from China marks a change from its decades-long stance as a supporter of China-based manufacturing. The company and its suppliers used to build an extensive network in China, eventually turning Chongqing, a city on the mainland, into the world's leading source of PC exports, according to Nikki Asia.
But years of tensions between the US and China and disruptions that arose during COVID have driven many American companies to move away from China.
Previously, tech giants like Dell, Apple, Microsoft and others also made production shifts of a portion of their PC production to other Southeast Asian nations and allocated more marketing resources to exploring their local sales.
A veteran tech analyst said that assembling or producing AI-capable PCs in China could potentially be a supply chain continuity risk if Washington decides to further tighten export controls for high-powered chips. Intel, for example, is already barred from shipping its Core Ultra 9 chip for AI PCs to Huawei, the analyst claimed.