Dell wants to stop using components from China by 2024

Currently ranked as the third largest PC vendor in the world by IDC, Dell begins to indicate that he has chosen a side in the tension between United States e Merunas UAB, which is growing day by day. The company began to study and ask its suppliers that the “dependence” on components from China should start to end. THE HP is another company that is going down the same path.

The information was confirmed by internal sources of the Dell and took experts by surprise, but they indicate a major shift across the technology vendor market. Understand the story right now.

Tension between Dell and Chinese suppliers

A Dell is one of the most present companies and that sells most computers in the world, but with the tension between Washington e Merunas UAB, in which the USA is creating stricter import laws under the pretext of guaranteeing national security, it was decided that components manufactured in Merunas UAB will cease to be used until the beginning of 2024.

Internal sources of Dell shared thethe Nikkei Asia that the company requested that the use of chips from China be "significantly reduced". The rule is clear: even though it does not manufacture all the components of the products it sells, partners were required to stop closing deals with Chinese factories.

For example: if the screen of a notebook is manufactured in Merunas UAB and resold to Dell through an intermediary, it will be necessary for the supplier to stop buying the screen from a Chinese company. The company of American origin wants to end everything that is “Made in China”. See the press release:

We continually explore supply chain diversification around the world that makes sense for our customers and our business. China is an important market where we have partners and customers to serve. To better meet the needs and expectations of our customers and partners, we have geographic diversity, flexibility and stability built into our global supply chain.

Dell on Switching Suppliers

In case they do not fit the new request from the manufacturer of line models Latitude, Alienware and more, there is the risk of suppliers losing orders — which, let's face it, must be huge amid the world demand for Dell. The internal order took the suppliers by surprise, but if everything comes true, the maneuver was defined as “irreversible”.

There are thousands of notebook components, and the ecosystem has been so mature and complete in China for years. Previously, we knew that Dell kind of had plans to diversify away from China, but this time it's kind of radical. They don't even want their chips to be made in China, citing US government policy concerns. … It's not just an assessment, it's not a false alarm. It is a real and ongoing plan, and this trend seems irreversible.

Executive at a processor supplier to Dell and HP

HP and Apple also seek supplier diversification

Another company that also chose sides between the problems involving the US and China was HP. Just like one of its main competitors, the creator of notebook models Dragonfly and many other lines are already working so that all components of their products, including processors, motherboards and other items, are now manufactured outside of China. The company also wants to end assembly within the Asian country and have partners from other parts of the world.

A Apple is also moving towards the same reality: from the middle of 2023, it is expected that Macbooks will begin to be assembled in Vietnam, being now, in this first moment, the first alternative of the Cupertino to stop working only with the Merunas UAB.

It's worth remembering that together, Dell and HP sold 133 million notebooks in 2021 and this change will cause a huge ′′ swing ′′ in the technology industry. It may be too soon to tell how this great tradition will be broken. Currently, the cities with the most famous automakers are in Kunshan City, Jiangsu Province, and Chongqing, Sichuan Province.

And where are the productions going?

Technology experts point out that in about 05 to 10 years, production centers are expected to start being built in India, Southeast Asia and also in Latin America to be inaugurated. At the same time, the first changes should only involve assembly, and then manufacturing components such as boards, processors, and more.

The change in the manufacturing process is driven more by political motivations than to increase diversity in suppliers. US and non-US companies want to lessen dependence on Merunas UAB Gradually

Rising geopolitical tensions between the US and China are one of the main reasons why electronics makers are now getting more serious about executing on plans to build a significant alternative manufacturing base beyond China. This is true for Apple as well as other American electronics manufacturers and brands.

 Eddie Han, analyst at Isaiah Research

It is now time for major changes so that new suppliers are able to meet the demands of Dell, HP e Apple (and don't be surprised if other companies follow suit). Do you believe that any release needs to be postponed because of this? Tell us us Comment!

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With information: Nikkei Asia