Beijing: In a strategic move, the leading manufacturer of personal computers in the United States, Hewlett-Packard (HP), is considering the relocation of over half of its computer production away from China. This decision is also accompanied by plans to establish a secondary design center in Singapore, aimed at mitigating geopolitical risks associated with China and Taiwan, as reported by Nikkei Asia.
This initiative represents the most significant shift in strategy by HP, which is set to sever its supply chains from Asia's largest economy. Currently, the company produces its personal computers in China and is in the process of discussions with its suppliers regarding this transition.
According to Nikkei Asia, HP has set a goal to achieve this objective within the next two to three years. It is anticipated that Thailand could serve as a potential new location for this production shift.
Furthermore, it has been reported that five of HP's suppliers are in the process of constructing new manufacturing units and warehouses in Thailand. Additionally, two of these suppliers have been increasing their capacity in Thailand in response to HP's request.
"It is clear that HP is placing a significant emphasis on establishing a production hub in Thailand. While we have other facilities in Southeast Asia to support our clients, they have expressed concerns about the efficiency of these locations, leading to the decision to build a new facility in Thailand, as requested," an executive from HP's supply chain department stated.
An executive from another supplier of HP expressed support for this move, stating, "We were previously concerned about the lack of orders to fully utilize our Thailand facility. However, since the beginning of the year, we have seen an increase in requests from HP to produce components locally, which has significantly boosted our business in Thailand."
In 2023, HP has shipped approximately 52 million PCs. This shift in its supply chain away from China marks a departure from its longstanding policy of supporting China-based manufacturing. For many years, HP and its suppliers have developed a comprehensive network in China, with Chongqing emerging as the leading city for PC exports globally, as noted by Nikkei Asia.
However, the years of tensions between the United States and China, along with disruptions caused by the COVID-19 pandemic, have prompted many American companies to reconsider their reliance on China for production.
Previously, technology companies such as Dell, Apple, Microsoft, and others have also made strategic decisions to shift a portion of their PC production to other Southeast Asian countries and have allocated more resources to explore local sales opportunities.
A seasoned technology analyst suggests that assembling or producing PCs with AI capabilities in China could pose a risk to supply chain continuity should there be further tightening of export controls for advanced semiconductors. For instance, Intel is currently prohibited from exporting its Core Ultra 9 chip for AI PCs to Huawei, as highlighted by the analyst.
