Tech Giants Cut China from Supply Chains
▼ Summary
– Major tech companies Microsoft, Amazon, and Google are accelerating plans to shift production and data center operations out of China due to escalating U.S.-China geopolitical tensions.
– Microsoft aims to source up to 80% of components for Surface devices and data centers from outside China by 2026, including notebooks, servers, and some Xbox console production.
– Amazon Web Services is evaluating reducing purchases of printed circuit boards from its Chinese supplier SYE for its AI data centers.
– Google is increasing server production in Thailand by working with multiple suppliers for parts, components, and assembly.
– Rapidly relocating production faces challenges due to the complexity of components and the advanced manufacturing capabilities of Chinese partners.
A significant shift is underway as major technology corporations actively reduce their reliance on Chinese manufacturing and supply chains. Driven by escalating geopolitical friction between the United States and China, companies including Microsoft, Amazon, and Google are accelerating plans to relocate production and data center operations to other countries. This strategic pivot, detailed in a recent report, highlights a fundamental restructuring of global tech supply networks.
Microsoft is pursuing one of the most ambitious transitions, with a goal to source as much as 80% of the components for its Surface notebooks, tablets, and data centers from outside China by 2026. The scale of this change is described as extensive, affecting both individual components and the final assembly of future notebook and server products. To meet this objective, Microsoft is reportedly instructing its current manufacturing partners to establish production capacity in other nations as early as next year. The company is also working to shift a portion of its Xbox gaming console manufacturing to other locations within Asia.
Amazon’s cloud computing division, Amazon Web Services, is taking similar steps. It is evaluating a reduction in printed circuit board purchases for its AI data centers from its established supplier, SYE. The company is actively assessing the operational requirements for such a move. Concurrently, Google is encouraging its suppliers to increase server production capacity in Thailand. The search giant has already secured several partners in the country to handle parts, components, and final assembly, creating a new production hub in Southeast Asia.
Despite these decisive plans, industry observers note that a rapid exodus from China presents considerable challenges. The country’s manufacturing ecosystem offers a vast and sophisticated network for producing a wide array of components. The technological expertise and production scale of Chinese partners are not easily or quickly replicated elsewhere, making a swift and complete transition a complex undertaking.
This corporate movement occurs against a backdrop of reciprocal economic measures between Washington and Beijing. Both nations have engaged in a cycle of imposing higher tariffs, tightening controls on the export of critical components and resources, and placing restrictions on the sale of certain technologies. These actions have created a business environment where diversifying supply chains away from China is increasingly viewed as a strategic necessity. Requests for comment from Microsoft, Google, and Amazon were not immediately returned.
(Source: TechCrunch)
