Major technology firms plan on shifting production from China

Several major technology companies are planning on moving their production out of China due to its ongoing trade war with the US. According to a report by Nikkei Asian Review, companies such as Amazon (NYSE: AMZN), Microsoft (NYSE: MSFT), Google, Dell (NYSE: DELL) and HP (NYSE: HPQ) are looking to shift a portion of their production capacity out of China to other countries due to higher costs and tariff threats.

Tech firms like Amazon and Google, and gaming companies like Nintendo are considering shifting the production of their smart speakers and gaming consoles out of China, Nikkei stated, citing multiple sources. PC makers Dell and HP are reportedly looking to move up to 30% of their notebook production out of China, with peers Lenovo and Acer also mulling a similar course of action, Nikkei added.

Dell and HP hold a combined 40% share of the worldwide PC market while Google is the market leader in Europe in the smart home devices segment, followed by Samsung and Amazon. Google held a market share of 16.8% in Europe in the first quarter of 2019 while Amazon held a 13.2% share.  

Last month, it was reported that Apple was assessing the cost of shifting 15-30% of its smartphone production from China to other parts of Southeast Asia.

The report stated that the increasing costs of production in China along with the threat of heavy tariffs from the ongoing trade war are a huge concern for these technology companies, and the truce struck by the presidents of the US and China at the G20 summit last week is not likely to have an effect on their plans.

These shifts could hurt China’s position as the top producer of gadgets and could lead to a slowdown in economic growth and job losses. The companies are looking at countries like Taiwan, Vietnam, the Philippines and Mexico for production shifts. Going forward, these companies could give China stiff competition in the field of electronics production, said Nikkei.

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