Liza Lin of The Wall Street Journal reports that amid escalating U.S.-China tensions, Western tech firms are increasingly relocating production away from China to countries like Vietnam and Malaysia. This shift is reshaping global supply chains despite the cost and logistical challenges. Lin writes:
For a growing number of Western tech companies, “Anything But China” is the order of the day.
In recent years, many multinationals decided they had become overreliant on suppliers in China, prompting them to pursue a so-called “China Plus 1” strategy of augmenting China-based suppliers with those in other countries.
Now, with U.S.-China tensions soaring again, many tech businesses are accelerating moves to shift production out of China and look for suppliers elsewhere, signifying a global tech world that is increasingly bifurcated between the two powers. […]
Unlike the first wave of diversification, when companies moved only the assembly of products outside of China, the current phase has involved shifting factories making components such as sensors, printed circuit boards and power electronics, according to a recent report by S&P. Such moves involve heavy upfront investments in machinery and parts, making the relocation in supply chains away from China much more permanent, S&P analysts wrote. […]
The “Anything But China” trend is particularly pronounced in products linked to semiconductors, the product at the heart of the U.S.-China tech friction. Over the past two years, Washington has banned China’s access to the most cutting-edge chips and equipment, while China has pushed hard to develop its own domestic chip alternatives. […]
This has led Malaysian exports of semiconductors, computers and other electronic products to hit a record $137 billion in 2024, with a large expansion of exports to the U.S.
As of 2023, China produced almost all of the world’s notebook computers. This year, research firm TrendForce estimates the country’s share of global production to fall to 80%, with Vietnam and Thailand producing an increasing number of laptops. […]
In the longer term, creating new production lines will get more expensive and risky, said IDC analyst Mario Morales.
“The [tech] supply chain has already reached over a trillion dollars in value,” he said. “The sophistication and complexity will only increase, making things more challenging for companies shifting.”
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