Apple, Microsoft, Google look to move production away from China

With the U.S.-China trade war last year and the outbreak of the new coronavirus, American technology firms Apple, Microsoft and Google have reportedly looked to move more production of their hardware products out of the world’s second-largest economy. But reducing reliance on China won’t be easy.

Google and Microsoft are accelerating their efforts to shift production of hardware to other parts of Asia, the Nikkei Asian Review reported last week. The problem for all these countries is that moving supply chains quickly will be a tough task and China will still have to play a major role. That might mean mitigating risk is a lot harder. The Nikkei, citing people with direct knowledge of the matter, said Google is set to begin production of an upcoming low-cost smartphone, rumored to be called the Pixel 4a, in Vietnam as soon as April. The upcoming flagship smartphone will also be manufactured there in the second half of the year, according to the report.

Google has also asked a manufacturing partner in Thailand to prepare production lines for its so-called smart home products, such as voice assistant-enabled speakers, Nikkei said. Meanwhile, Microsoft is hoping to start production in Vietnam in the second quarter for its Surface line of notebooks and desktop PCs, it added. Both of these companies’ hardware has been mainly produced in China until now. Microsoft declined to comment while Google did not respond to two requests for information when contacted by CNBC.

Last year, Apple was reportedly looking to start a trial for the production of its AirPods in Vietnam and asked suppliers to look into moving 15% to 30% of production from China to other parts of South East Asia. Apple did not respond to a request for comment when contacted by CNBC.

The components part is a bigger issue. Moving component manufacturing outside of China will also be difficult given how entrenched it is and how long it would take to build capacity in another country. On top of that, suppliers for components that companies rely on will have their manufacturing in China. That could make any move for an American technology firm to diversify a much longer process.

Apple, Microsoft, Google look to move production away from China, CNBC, Mar 5