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HP, the leading US computer manufacturer, is embarking on a significant shift in its personal computer supply chain to diversify its production beyond China. Millions of consumer and commercial laptops will be manufactured in Thailand and Mexico this year. HP is also planning to start production in Vietnam next year. The company shipped 55.2 million PCs worldwide last year.
This move allows HP to take advantage of existing PC suppliers in Thailand and better serve the North American market through production in Mexico. HP emphasized that it remains committed to its operations in China, which is an essential part of its global supply chain.
This diversification effort by HP follows Dell’s decision to exclude “made in China” chips from its products and decrease its reliance on Chinese electronic components. Dell plans to produce 20% of its laptops in Vietnam this year and gradually shift away from Chinese chips by the end of 2024. Apple has also started manufacturing MacBooks in Vietnam.
HP’s move not only diversifies its supply chain but also contributes to the development of PC supply chain ecosystems in Vietnam and Thailand. These countries are becoming attractive options for computer manufacturers seeking alternatives to China. However, HP has been relatively slower compared to other US tech companies in shifting production away from China due to challenges such as rising manufacturing costs and labor recruitment difficulties.
Although HP wants to keep its diversification plans low-key, it has discussed potential collaborations with electronics component makers in Vietnam regarding shipments to Thailand. This step reflects HP’s intention to gradually reduce its dependence on China for chips and components.
The US is the largest PC market for both HP and Dell, accounting for a significant portion of their shipments. However, concerns about US-China tensions and emerging production hubs in Southeast Asia have prompted these companies to diversify their supply chains. While this move may not directly impact their market share in China’s consumer market, it could affect government-related bids and contracts.
Overall, the diversification initiatives by HP and other tech companies signal a shift away from China and a growing interest in Southeast Asian countries as alternative production hubs.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business, and international affairs. Subscribe to Nikkei Asia for more comprehensive coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
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