HP Moves PC Production Out Of China To Reduce Geopolitical Risks

HP is reportedly planning to relocate more than half of its personal computer production from China, setting up a "backup" design hub in Singapore to mitigate geopolitical risks involving China and Taiwan, according to a Nikkei Asia report. This marks the company's most aggressive effort to diversify its supply chains away from Asia's largest economy.

HP, which presently manufactures the majority of its PCs in China, is in discussions with suppliers about implementing this strategic move. The company hopes to complete this transformation within two to three years, with the ultimate goal of moving up to 70 per cent of its production outside of China. The magnitude of this shift will differ amongst suppliers based on the complexity of the components they manufacture.

In a comment to Nikkei Asia, HP cited a 2023 blog post by Chief Supply Chain Officer Ernest Nicolas on the company's website. Nicolas elaborated: “We'll continue investing in current sites where we have long-time operations, while sometimes shifting certain production to alternate locations to create flexibility and mitigate risk for our customers.”

Thailand has been recognised as a key location for HP's relocated production. At least five HP suppliers are developing new manufacturing facilities or storage hubs in the country, with two doubling capacities since early this year at HP's request. According to an executive-level source at a supplier, "HP is undoubtedly betting big on establishing a production hub in Thailand." We have other Southeast Asian facilities to assist the client, but they stated it wasn't efficient enough, therefore we're currently establishing a new facility in Thailand, as asked."

Apart from Thailand, HP is increasing its presence in Singapore. The company is looking to hire engineers and managers to form a backup team for its Taiwan Design Centre, which is in charge of designing new products and liaising with suppliers. According to a source, "HP is hiring approximately 200 additional engineering staff and professionals, including electrical and mechanical engineers and supply chain experts, to transform Singapore into an alternative design hub." The move is a risk-reduction step to prevent any dramatic situations involving a potential confrontation between Taiwan and China."

Another supplier executive welcomed the increased business, noting, "We were concerned about not having enough orders to fully utilise our Thailand facility, but since earlier this year, we've received more requests from HP to build components locally." Our business in Thailand is currently highly busy.