Supply Chain Reorganization Moves HP's Production of Millions of Laptops Out of China

Hewlett-Packard (HP) is working with suppliers to shift production of millions of laptops from China to Thailand and Mexico. This will be the first time the US computer maker has moved its supply chain out of China on a large scale.

According to Nikkei Asia (link), HP is the worlds second-largest personal computer (PC) maker after Chinas Lenovo. Currently, HP is planning to transfer its commercial notebook production line to Mexico, and transfer some of its consumer notebook production lines to Thailand.

One of the suppliers said HP also plans to shift some of its notebook production to Vietnam starting next year.

According to sources, HP will move millions of laptops from China this year, with a maximum of 5 million units. According to research firm Canalys, HP shipped 55.2 million PCs globally last year.

Thailand already has several PC suppliers, which will help HPs shift, while production in Mexico will help HP serve the all-important North American market.

On Monday, HP issued a statement on its website, saying that the company is expanding existing production lines in Southeast Asia and other places, and continues to increase notebook production in Mexico.

People familiar with the matter told Nikkei Asia that Dell (Dell) started its supply chain diversification plan earlier than HP, and will produce at least 20% of its notebook computers in Vietnam this year. But in terms of components, it is estimated that Dell will not be able to complete its plan to completely eliminate Chinese-made chips until the end of 2024.

Meanwhile, Apple began making MacBooks in Vietnam this year, the first time Apple laptops have been produced outside of China.

HPs move will further help Vietnam and Thailand establish a PC supply chain ecosystem. Southeast Asia has become one of the most attractive regions for manufacturers to restructure their supply chains to reduce reliance on China amid geopolitical uncertainty.

HP has been relatively slow to shift production out of China compared with other U.S. tech companies. However, HP has been in talks with suppliers since 2019 to evaluate this option.

A supply chain executive said: "HPs plan is to first move its production lines outside of China, but HP has not yet made a clear and firm commitment, and has decided to switch to non-Chinese-made chips and components on a large scale. .”

However, three other supplier sources directly involved in the talks said HP had discussed the possibility of shipping to Thailand with electronic component makers in Vietnam.

An HP supplier executive said: "HP hopes to keep a low-key plan to move production lines out of China. The decision to move out, in addition to geopolitical concerns, also considers the increase in production costs in China, such as recruitment challenges and rising labor costs. wait."

According to Canalys data, the United States is the largest single PC market for HP and Dell, accounting for 31% and 40% of their shipments in the first quarter of this year, respectively. The Chinese market is much smaller, accounting for only 7.5% and 8%, respectively. In China, the PC market is dominated by Lenovo and Huawei.