HP is working with various electronic manufacturing service (EMS) providers to transfer a significant portion of its laptop production from China to Thailand, Mexico, and eventually Vietnam, reports Nikkei. This move is part of a broader trend among tech giants to diversify their manufacturing bases, with geopolitical tensions and rising costs in China being primary drivers.
As the world’s second-largest PC manufacturer, following Lenovo, HP’s decision to relocate its production is notable. The company plans to produce some of its commercial notebooks in Mexico, while consumer laptops will be manufactured in Thailand. Additionally, there’s an upcoming shift to Vietnam slated for 2024. The production outside of China for this year is projected to be between a few million to 5 million units, a significant number considering HP’s global shipment of 55.2 million PCs in 2023.
Thailand’s existing infrastructure of PC suppliers is expected to ease HP’s transition. Meanwhile, producing in Mexico aligns with HP’s strategy to cater more efficiently to its primary market, North America. Despite these changes, HP remains committed to its operations in China, particularly in Chongqing, a city it helped develop into a major laptop production hub since 2008.
This strategic move by HP mirrors similar decisions by other tech behemoths. Dell, for instance, has been actively working to decrease its dependency on chips made in China. The company also set a target to manufacture at least 20% of their laptops in Vietnam this year. Similarly, Apple has also initiated MacBook production in Vietnam.
The overarching reason for these shifts is multifaceted. While geopolitical concerns between the U.S. and China play a role, there are also practical considerations. China’s escalating manufacturing costs, including challenges in labor recruitment and rising labor costs, are pushing companies to explore more cost-effective alternatives. The U.S. being a significant market for both HP and Dell further underscores the strategic importance of these moves.