HP is reportedly planning to move more than half of its personal computer production lines out of China and establish a “backup” design center in Singapore to reduce geopolitical risks.
According to a report by Nikkei Asia, the multinational technology company HP, headquartered in California, USA, is relocating its personal computer production center out of China to diversify its supply chain.
Although most of HP’s personal computers are currently manufactured in China, the company is in talks with suppliers to achieve the transfer of production lines within two to three years.
The company has even set an internal goal that ultimately 70% of the production lines for laptops will be moved out of mainland China, with Thailand being the primary destination for relocation.
Insiders revealed that at least five HP suppliers are building new production facilities or warehouses in Thailand. Two of these suppliers have been increasing the capacity of their Thai factories since the beginning of this year in response to HP’s requirements.
HP is also recruiting engineers and managers in Singapore to establish a backup team at its flagship product design center in Taiwan. This team will be responsible for intensive development of new products and coordinating with the supply chain to address the risk of conflict erupting in the Taiwan Strait.
“HP is hiring around two hundred engineering and professional staff in Singapore, including electrical and mechanical engineers as well as supply chain experts, to create an alternative design center,” said one insider.
Research data from IDC shows that HP’s personal computer shipments in 2023 were approximately 52 million units, second only to Lenovo.
For decades, HP and its suppliers have built an extensive network in China, ultimately making Chongqing, China a leading global export hub for personal computers. However, with the global restructuring of supply chains, the company’s production lines are accelerating their exodus from China.
As tensions rise in the US-China tech war, many US tech giants are hastening their departure from China. Companies like Dell, Apple, and Microsoft have already transferred parts of their personal computer production lines to Southeast Asia and have invested more marketing resources to tap into local markets.
During internal meetings this year, HP executives have been emphasizing the emerging business opportunities in Southeast Asia and the Middle East, while also highlighting the geopolitical risks of keeping production centers in China.
Jeff Lin, a technical analyst specializing in the personal computer industry at Omdia, stated, “From our research on supply chains, we have indeed found that HP and Dell are taking their diversification plans out of China more seriously. For them, the concept of ‘risk mitigation’ has become crucial in future supply chain strategies.”