In turn, HP, Dell and Microsoft plan to withdraw their production lines from China - Photo 1.

HP, Dell and Microsoft, in turn, plan to withdraw their production lines from China

Global consumer electronics manufacturers such as HP, Dell, Microsoft and Amazon are trying to pull out production lines from China. Earlier, a series of big technology industry players such as Apple, Samsung, and Google … also found their way out of the world's "factory".

HP and Dell are currently the world's first and third largest PC makers, accounting for a total of about 40% of the global market share. According to Nikkei, the two companies are planning to move about 30% of their laptop production lines out of China.

Meanwhile, Microsoft, Google, Amazon, Sony and Nintendo are also considering moving some of the gaming and smartphone production lines from China to other Southeast Asian countries. Other major computer manufacturers such as Lenovo, Acer and ASUS are also considering plans to change device manufacturing positions.

The US-China trade war is the reason why technology companies must have coping plans. Although President Donald Trump and President Xi Jinping had an armistice agreement at the G20 Conference in Osaka, last weekend, according to some sources, the situation is still too precarious. In addition, increasing production costs in China also make equipment industry professionals have to consider alternatives.

Most companies will try to move the production line of equipment for the US market out of China. Last month, Nikkei reported that Apple plans to transfer about 30% of its smartphone production lines from China. The production lines of servers, network equipment and some core electronic components have also been moved at the request of US customers.

The massive "migration" of global technology firms will be a strong blow to China's electronics exports, which spur the country's decades-long growth phase. China is currently the largest manufacturer of computers and smartphones worldwide.

From 1991 to 2017, China's total exports and imports in the electronics sector increased by 136 times, from more than US $ 10 billion to US $ 1.35 trillion.

However, many technology firms have been hit hard by the US-China trade war, especially the policy of raising taxes on $ 250 billion of Chinese goods imported into the US. Besides, no one dares to assert that the US will not continue to raise taxes on Chinese goods.

HP, Dell and Microsoft, in turn, are about to withdraw their production lines from China - Photo 2.

Companies specializing in manufacturing and assembling servers like Quanta Computer, Foxconn and Inventec have all transferred a number of production lines from China to Taiwan, Mexico and the Czech Republic to avoid tariff barriers as well as reduce concerns. customers on national security. "After the tariff barrier applied to Chinese goods came into effect on September 24 (2018), we started producing and transporting servers for customers from factories outside China.", a director of Taiwanese server maker shared.

The move of production lines out of China will cause Chinese workers to lose their jobs and the economy will be stagnant. Currently, China's economic growth rate is at its lowest level since 1990 up to now.

"The United States may also suffer from some negative effects from the process of moving production lines when products may be more expensive.", Darson Chiu, an economist at the Taiwan Economic Research Institute, said. "But China will suffer more because the economy of this country may be more stagnant and many workers will have to find work in other fields.".

HP and Dell, a total of about 70 million laptops shipped worldwide last year, mainly produced computers in Chongqing and Kunshan, China, the two largest laptop manufacturing centers in the world. Laptops, with global sales totaling more than 160 million units, are the second largest consumer electronics devices worldwide, behind smartphones with 1.4 billion units.

But Chongqing, which once produced one-third of all laptops shipped worldwide, is losing its appeal to companies like HP and Dell. A local official shared with Nikkei that HP cut its estimate of 2019 laptop production in Chongqing to less than 10 million units, almost half of its production in the previous two years.

"Rising production costs in China have caused orders to decline. Currently, the US-China trade war continues to make things worse.", officials on sharing.

HP has outlined plans to move about 20% to 30% of laptop output outside China. The company is considering building new supply chains in Thailand or Taiwan. The migration process can begin as early as Q3 / 2019 but may also change.

Meanwhile, Dell began testing laptop production lines in Taiwan, Vietnam and the Philippines. Internal sources shared that Dell feared the negative effects of trade war but also worried about the shortage of factory manpower and rising costs in China.

According to Trendforce, about 47% of Dell's total laptops shipped to North America, its largest market. Meanwhile, 40% of HP's laptops shipped on board towards this market.

"On average, technology firms will move about 30% of their production lines out of China, depending on the importance of the US market. All firms must offer a specific plan for questioning. this topic ", a director in shared supply. "Apple is the company that makes the final and slowest plan while others are much faster."

Meanwhile, Amazon and Nintendo are considering Vietnam as a destination for Kindle e-book production line, Echo smart speaker and game machine. Microsoft is eyeing Thailand as well as Indonesia.

Both Acer and ASUS confirm with Nikkei that they are studying the feasibility of moving some production lines outside China. Dell declined to comment on the location move, saying only that the US and Central China are continuing to dialogue to resolve outstanding issues and hope to have an agreement signed.

HP, Google, Microsoft and Amazon have no feedback on the information in this article.

According to Nikkei

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