'This trend looks irreversible,' supplier exec says of tech industry's production shift:
Dell plans to cease using chips produced in China in its products by 2024 amid concerns over tensions between the U.S. and China, reports Nikkei citing sources familiar with the PC maker's plans.
It is unclear whether Dell can indeed replace all chips made by companies like SMIC and Hua Hong by next year from all of its designs and how this affects its costs.
[...] There are several reasons why Dell wants to stop using chips produced in China in its products. First up, the company will diversify its supply chain. Secondly, U.S. lawmakers late in 2021 considered banning devices that feature chips made in China from using by government organizations due to national security concerns. The government did not proceed with the idea, but certainly Dell wants to ensure that its gear does not get banned by U.S. legislators even if they prohibit usage of hardware featuring China-made chips by government agencies, which are among its major clients.
[...] All large U.S.-based PC makers transferred their production to China in the recent couple of decades, which helped to create a fully-fledged supply chain in the country. But rising labor costs in China and growing tensions between the People's Republic and the U.S. have urged PC makers to diversify their supply chains.
Apple reportedly plans to produce some of its MacBooks in Vietnam starting 2023, whereas numerous server makers are transferring their production to Taiwan. Even Foxconn, the world's largest contract maker of electronics, has been establishing presence in India and Vietnam for a while, which is not easy as Vietnam still lacks sufficient engineering talent.
Related:
- China's Government, State-Backed Firms to Scrap Foreign PCs Within Two Years
- Foxconn to Shift Some Apple Production to Vietnam to Minimize China Risk
- China Trade War Could Push iPhone Contractor Foxconn to Build in Mexico
Related Stories
For years, iPhones (or their boxes) have said that they were "designed by Apple in California. Assembled in China." But thanks to an escalating trade war between the US and China, that might not be true in the coming years. Reuters reports that two of Apple's biggest manufacturing contractors, Foxconn and Pegatron, are working to expand their facilities in Mexico with an eye toward eventually building iPhones there.
[...] This isn't Foxconn's only effort to diversify away from China. Last year, Foxconn announced plans to begin manufacturing iPhones in India, and the company is now manufacturing the iPhone SE there.
Sources told Reuters that Taiwan-based iPhone contractor Pegatron is also considering a shift to Mexico, but few details about its plans are known.
Previously:
Exclusive: Foxconn to shift some Apple production to Vietnam to minimise China risk:
Foxconn is moving some iPad and MacBook assembly to Vietnam from China at the request of Apple Inc, said a person with knowledge of the plan, as the U.S. firm diversifies production to minimise the impact of a Sino-U.S. trade war.
The development comes as the outgoing administration of U.S. President Donald Trump encourages U.S. firms to shift production out of China. During Trump's tenure, the United States has targeted made-in-China electronics for higher import tariffs, and restricted supplies of components produced using U.S. technology to Chinese firms it deems a national security risk.
[...] Foxconn is building assembly lines for Apple's iPad tablet and MacBook laptop at its plant in Vietnam's northeastern Bac Giang province, to come online in the first half of 2021, the person said, declining to be identified as the plan was private.
[...] "The move was requested by Apple," the person said. "It wants to diversify production following the trade war."
Foxconn said in statement: "As a matter of company policy, and for reasons of commercial sensitivity, we do not comment on any aspect of our work for any customer or their products".
Apple did not immediately respond to a request for comment.
China's Government, State-Backed Firms to Scrap Foreign PCs Within Two Years:
In a bid to support local PC makers and software developers and reduce the impact of any potential future sanctions from western governments, China's government this week reiterated its order to replace foreign-branded PCs and programs used by government agencies and state-backed companies with local technology within two years.
While replacing a Dell running Windows with a Lenovo running Linux sounds tempting for Chinese companies, it looks like the country has been failing to do so up to this point, but the renewed initiative appears to have more teeth.
Chinese central government authorities this week ordered government agencies and state-owned and state-backed firms to stop using foreign-branded computers and software within two years and replace them with locally developed hardware and software, reports Bloomberg. Eventually, the mandatory program will be extended to provincial governments and give them a two-year switch period. The aggressive plan requires the replacement of at least 50 million PCs used by central government agencies alone, notes the report.
There are several reasons why the Chinese government wants the country to switch to local technologies. Firstly, it wants to keep Chinese money in China and not see it headed to foreign companies. Secondly, after learning from the Huawei crackdown lesson, it wants to ensure that it does not rely on technology developed and built elsewhere. Specifically, technology that could be barred from being imported to China. Thirdly, it wants to strengthen the security of its agencies and commercial entities.
(Score: 4, Insightful) by Opportunist on Sunday January 08, @01:50PM (1 child)
Let's be serious for a moment: Manufacturing is a drop in the pond of the cost of a high tech product. Most of the money is in development, design, marketing, patents and licenses. Not necessarily in that order. Manufacturing, i.e. the actual making of the chips, the PCB and then putting it all together is so insignificant that it's laughable. Most of it is automated, a lot of the rest can be done by semiskilled labor. That's something where you can easily take someone who has so far assembled cars or pushed buttons in some stamp press and put them to good use there. The cost for that kind of labor isn't that insane.
So what's the problem with bringing these jobs back here? Believe it or not, the environment.
Microelectronics, and the making thereof, is a very dirty business. The chemicals involved are anything but environmentally friendly. Not a big deal in China or Vietnam, nobody here cares if those countries go to hell, but we want to live here!
Well, there's a solution to that. I know, the word "recycling" isn't in the US dictionary, but believe me, it does exist. Not only that, but it's also an industry that creates quite a few jobs. Again, not too high paying and not glamorous ones, but it's jobs that semi-skilled or even unskilled people can do, in other words, exactly what we need anyway because these jobs get eliminated left and right and since people aren't exactly fungible and you can't turn a "you want fries with that" professional into a nuclear scientist, we're in desperate need of such jobs anyway. We could put some of that tax money that now goes overseas to companies that produce there into that industry instead.
tl;dr: We want domestic production. For more than one reason. First, it's jobs. Seconds, it's independence from countries that are not exactly what you'd call "friendly". And second, it will boost other industries because people would again have money to buy the crap that we want to sell them. Here. Not somewhere else.
(Score: 2) by bloodnok on Sunday January 08, @08:12PM
You sir, are a dangerous revolutionary. Well done.
__
The Major
(Score: 3, Funny) by Rosco P. Coltrane on Sunday January 08, @03:01PM
https://www.baikalelectronics.com/ [baikalelectronics.com]
Let's break our dependence on electronics made in unsavory countries.
You're welcome.
(Score: 4, Informative) by RamiK on Sunday January 08, @04:54PM
Huawei made a similar statement about their stations only having 1% made-in-the-US chips a few days ago: https://www.huaweicentral.com/huawei-5g-base-station-teardown-reveals-only-1-u-s-components/ [huaweicentral.com]
It seems to have been a response to to the FCC deciding to stop certifying Huawei and a few other Chinese manufacturers: https://www.cyberghostvpn.com/en_US/privacyhub/us-bans-chinese-tech/ [cyberghostvpn.com]
For those not keeping track and not understanding why Huawei and 5g seems to be in the center of the supply chain disputes, the recent escalation started around the prisoners exchange: https://www.wsj.com/articles/huawei-china-meng-kovrig-spavor-prisoner-swap-11666877779 [wsj.com]
The ban: https://www.reuters.com/business/media-telecom/us-fcc-bans-equipment-sales-imports-zte-huawei-over-national-security-risk-2022-11-25/ [reuters.com]
The court dismissal of the case: https://www.reuters.com/legal/us-judge-dismisses-indictment-against-huawei-cfo-that-strained-us-china-2022-12-02/ [reuters.com]
Huawei and Qualcomm agreeing on 5g royalties: http://www.fosspatents.com/2022/12/huawei-qualcomm-interdigital-agree-that.html [fosspatents.com]
Possibly over Qualcomm wanting to move the NTN and OpenRAN vs. RAN issues forward: https://www.keysight.com/us/en/about/newsroom/news-releases/2023/0104-pr23-006-keysight--qualcomm-accelerate-5g-non-terrestrial-n.html [keysight.com] https://www.allaboutcircuits.com/news/qualcomm-goes-the-distance-with-new-macro-5g-ran-platform/ [allaboutcircuits.com]
Which meant Apple gave up on their own 5g development: https://9to5mac.com/2023/01/06/apple-planned-to-introduce-its-own-5g-chips-in-now-canceled-iphone-se-4-next-year/ [9to5mac.com]
And even made Huawei themselves focus on marketing 4g-to/and-5g instead of just 5g: https://www.huaweicentral.com/5g-phone-market-decline-huawei-said-4g-is-more-mature/ [huaweicentral.com]
Anyhow, between the disinformation coming from all sides, the speculators poisoning wells, the NFTs meltdown*, the tech layoffs, the recession and the Ukraine war, it seems no one is doing comprehensive coverage of the trade war so not only the nuances but the context of the stories sorta got lost this past month or so and the journalists themselves aren't keeping track. Personally I doubt it matters considering the recession is slowing down the economy so much that arguing over who gets to produce what when people can't afford to pay hardly matters... But it seems the media disagrees.
* I'm guessing the tulip mania is probably the biggest attention grabber since the reader demographics overlap and major media outlets were forced into covering it by public demand at the expense of everything else: https://slate.com/technology/2023/01/crypto-media-journalism-tiffany-fong-decrypt-coindesk-coffeezilla.html [slate.com]
compiling...
(Score: 2) by MIRV888 on Sunday January 08, @07:10PM (1 child)
Manufacturing chips may be a dirty business, we don't want an Archduke AMD Radeon RX 6700 XT starting a war.
(Score: 0) by Anonymous Coward on Monday January 09, @02:53AM
7900 XTX might be worth starting a war over.