From smartphones to laptops, the supply chain of electronic products is shifting away from China. According to sources familiar with the matter speaking to Nikkei Asia News, Microsoft plans to start producing most of its new products outside of China as early as next year, while Amazon Web Services (AWS) is expanding its supply chain shift to include components.
These developments indicate that amid ongoing tensions between the US and China, American tech companies are working to accelerate disentangling their supply chains from the Chinese market.
According to reports by Nikkei, sources revealed that Microsoft has requested several suppliers to assist in the preparation for “off-China” production of Surface laptops and data center servers, including key components and assembly, with a target starting from next year.
One source disclosed to Nikkei, “The scope is quite broad, covering the components, parts, and product assembly required for the launch of new products for laptops and servers. Microsoft hopes that starting from 2026, all these products can be entirely produced outside of China.”
According to industry executives and research company Omdia, Microsoft ships approximately 4 million Surface laptops and tablets annually.
One source mentioned that due to the sensitivity of these products, Microsoft has already shifted a significant portion of server production outside of China since last year. The source stated that Microsoft has requested at least 80% of the server Bill of Materials (BOM) to come from overseas. The BOM lists all the parts, components, and assembly processes of a product. The source also said that Microsoft is working to increase the production of Xbox gaming consoles outside of China, but currently has not demanded full production be shifted out of China.
Several sources familiar with the industry revealed that this is the first time a top American tech giant (Microsoft) has set a goal to drastically reduce China’s share in the company’s supply chain, including components and materials such as fiber optics, cables, connectors, passive components, and printed circuit boards.
Sources revealed to Nikkei that Amazon Web Services is also one of the US companies adopting non-Chinese production, especially in the production of sensitive artificial intelligence data center servers.
According to a source directly familiar with the matter, AWS is even considering reducing procurement from its long-term PCB (printed circuit board) supplier in China, Shengyi Electronics (SYE).
At the same time, two sources revealed to Nikkei that Google is requesting suppliers to actively expand server capacity in Thailand. One of the sources mentioned that a server system assembler has helped Google establish four new factories in Thailand, doubling its production capacity in the country.
Another source stated, “Google now has multiple suppliers in Thailand, from assembly to components, helping it produce servers independently… an ecosystem has been formed.”
Previously, the strict COVID-19 lockdown policies by the Chinese Communist Party had disrupted supply chains for industries such as iPhones and automobiles, leading to a significant number of Western companies relocating production to Vietnam and India. Subsequently, the US imposed export controls on the Chinese semiconductor industry, accelerating this shift. After Trump returned to the White House, he further promoted the relocation of corporate supply chains away from China.
In late September, Peter Navarro, White House trade and manufacturing advisor, told Fox News that the new tariff policy would reduce US reliance on China, rebuild supply chains, and protect national security through tough trade policies.
A survey by the China-United States Business Council showed that 30% of surveyed companies planned to relocate their production bases, and a quarter of tech companies had begun moving away from Chinese supply chains.
Microsoft, AWS, and Google are all working to reduce their dependency on China in their supply chains to prevent possible disruptions due to the escalating tensions between the US and China. Recently, China implemented additional export controls on key rare earths and battery materials, triggering strong retaliatory measures from the US and coordinated responses from multiple Western countries.
On July 30th this year, Hanneke Faber, CEO of Logitech International, stated that the company is accelerating the relocation of its production lines from China.
Logitech’s products like keyboards and mice are also manufactured in China and exported to the US. Faber pointed out that Logitech aims to reduce the proportion of products manufactured in China to 10% of US imports by the end of 2025, down from about 40% in 2024 to “slightly less than 30%.”
Dell announced in 2023 its plans to gradually phase out chips manufactured in China by 2024, while HP plans to relocate up to 70% of computer production out of China.
Additionally, sources revealed to Nikkei that against the backdrop of tense cross-strait relations and escalating geopolitical risks in the Taiwan Strait, US companies are making efforts to establish alternative production bases outside the Greater China region.