HP is looking for more efficiency and less risk in the production of their PC’s, as they look into a new manufacturing process outside of China.
Recently the company’s market cap fell to US$30b after a 6.4% drop in the share price. During the last year, shares fell 23% partly due to PC sales falling over 30%.
The US company is now working with suppliers in an effort to move the production of millions of notebooks to Thailand and Mexico in an effort to diversify the supply chain away from China.
HP is the world’s No. 2 PC maker behind Lenovo with Vietnam production coming online next year.
Output outside of China this year is expected to be up to 5 million units, with HP shipping 55.2 million PCs worldwide last year.
Thailand already has a hand in multiple PC suppliers helping to facilitate HPs shift, and production in Mexico would benefit through the US market.
In a statement released by the company, they said expanding existing operations has been “adding incremental notebook PC production.”
This plan comes after Dell launched a campaign to exclude “made in China” chips from products and majorly reduce the overall use of electronic components produced in the country.
Dell is expected to make at least 20% of laptops in Vietnam this year, and it will take them until the end of 2024 approximately to complete the planned shift away from “made in China” chips.
Apple have also begun producing MacBooks in Vietnam, this year becoming the first time outside of China.
HP’s move is expected to help Vietnam and Thailand build a supply chain ecosystem for PCs, and facilitate an option outside of China.
Analyst Kieran Jessop said, “The primary purpose of supply chain diversification is to mitigate risk factors related to U.S.-China tensions, or to take advantage of emerging production hubs in Vietnam and other Southeast Asian countries.”
It was claimed the supply chain diversification won’t likely directly affect American PC makers’ market share in China, but it could affect some government related bids.
“Some opportunities in government or public education [sectors] may be lost because of concerns and policies around domestic sourcing and manufacturing.”
