HP’s Shifting Supply Chain: A Strategic Move Beyond China

by Editorial Team

In the ever-evolving landscape of the global tech industry, diversification has become a strategic necessity. In a recent episode of “Tech Latest” by Nikkei Asia, Alice French, Jayden Agomo, and Kenji Kawase delve into the significant shift happening in the supply chain of the world’s second-largest PC maker, HP.

HP’s Strategic Diversification

According to Kenji Kawase, HP is working with its suppliers to shift production of millions of consumer and commercial laptops to Thailand and Mexico this year. This move signifies a substantial first step towards diversifying its personal computer supply chain beyond China.

“China is a very important part of our global supply chain and we remain deeply committed to our operations in Chongqing.” – HP’s official statement

HP is planning to shift some commercial notebook computer production to Mexico, while a portion of its consumer laptop production will go to Thailand. HP is also planning to shift some laptop production to Vietnam, starting next year. The output outside of China this year will be a couple of million to 5 million units, they said. HP shipped 55.2 million PCs worldwide last year, Canalys’ data showed.

Following Industry Trends

HP’s move echoes similar strategic decisions by other tech giants like Dell and Apple. Dell plans to manufacture at least 20% of all its laptops in Vietnam this year and aims to completely walk away from ‘Made in China’ chips by the end of 2024. Apple, on the other hand, will begin to assemble MacBooks in Vietnam this year, marking the first time their laptops will be made outside of China.

Why Thailand and Mexico?

HP’s choice of Thailand and Mexico for its production shift is strategic. Mexico’s proximity to HP’s main market, the United States, makes it an attractive option. Thailand, already home to a number of PC suppliers, offers a ready-made ecosystem for HP to tap into.

“Thailand already has a number of PC suppliers which makes it really easy for HP to just move in.” – Kenji Kawase

The Bigger Picture

This shift in production is not just about decoupling from China. It’s also about cost-effectiveness. As China is no longer a place for cheap labor, diversifying production also makes sense from a cost point of view.

“China is no longer a place where cheap labor anymore so diversifying production for HP also makes sense from a cost point of view as well.” – Kenji Kawase

Key Takeaways

The tech industry is witnessing a significant shift in production strategies. Companies like HP, Dell, and Apple are diversifying their production beyond China, indicating a broader trend in the industry. This strategic move is not just about decoupling from China but also about cost-effectiveness and proximity to key markets.

What do you think about this shift in the tech industry’s production strategies? Do you believe other companies will follow suit? Share your thoughts in the comments below!

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