China is the world’s manufacturing hub. Almost all of the products from major tech companies are manufactured there. This also leaves them in a bit of a sticky spot when trade tensions between China and the United States flare up. As the threat of new tariffs on products like laptops and smartphones looms, it’s now being reported that companies like Microsoft, Amazon, and HP are also looking to more some production outside China.
According to Nikkei, Microsoft, Amazon, HP, and Dell have all been considering moving some production outside the People’s Republic. HP and Dell are both said to be considering moving out up to 30 percent of their laptop production. Microsoft might shift some Xbox production while Amazon would do that for its Kindles and Echo speakers.
The ongoing trade war between the two countries has resulted in a 25 percent tariff on over $200 billion worth of Chinese goods. The technology industry has largely been unaffected but that could change as there’s the possibility of the tariffs being expanded to products like smartphones, tablets, and gaming consoles.
Merely shifting some production outside China would mean that the products these companies sell back home could be made elsewhere so that they’re not subject to those tariffs when they’re imported into the United States. The other alternative would be to pass on the tariff impact to customers which would raise prices and lead to a decline in sales, a scenario that not may tech companies would be willing to consider.