US-China tensions: Microsoft and other 'big guys' move production out of China

Nikkei Asia reported on October 16 that technology corporation Microsoft is planning to move most of its new product manufacturing out of China, as early as 2026.

Microsoft headquarters in a building in Beijing, China - Photo: REUTERS

This move comes as many US technology giants such as Amazon Web Services (AWS) and Google are also accelerating supply chain restructuring to reduce dependence on the Chinese market.

This trend shows the increasingly clear efforts of US technology corporations to "escape" from China, amid geopolitical tensions between Washington and Beijing that have not yet cooled down.

Microsoft pushes the envelope

Microsoft has asked multiple suppliers to prepare for production outside China for key products such as Surface laptops and data center servers - including both core components and final assembly, sources told Nikkei Asia .

"The scope of this plan is very broad, covering the entire value chain - from components, parts to the assembly process of product lines such as laptops and servers. Microsoft expects the entire production process to take place outside of China from 2026" - a supply chain director shared.

Microsoft began shifting much of its server production out of China last year due to the sensitivity of the product in a complex geopolitical context, according to another source. Currently, the company requires at least 80% of the bill of materials (BOM) of the server to be sourced outside of China.

With its Xbox consoles, Microsoft is also pushing to move production overseas, although it has not set a goal of producing entirely outside of China at the moment.

"Assembly can easily be moved, but relocating the entire component supply chain overseas is a bold move, especially with a short timeframe like 2026," said a senior executive at a Microsoft supplier.

Unprecedented wave of migration

Not only Microsoft, sources said Amazon Web Services (AWS) is also accelerating the shift of production out of China, especially for data center servers serving artificial intelligence (AI) - a product considered both strategic and sensitive in the current geopolitical context.

Meanwhile, Google is said to have asked its partners to significantly expand server production capacity in Thailand. One of its main assembly partners has built up to four new facilities in the country to meet the sharp increase in demand from Google.

According to Nikkei , technology giants such as Microsoft, AWS and Google are all making efforts to reduce their dependence on the Chinese supply chain, in order to limit the risk of production disruptions as US-China tensions continue to escalate and show no signs of cooling down.

However, according to experts, moving the entire supply chain out of China is not easy, especially for basic electronic components such as resistors, capacitors or inductors - which are cheap and have extremely abundant supply in China.

"We were asked to develop a production plan outside of China for our cloud service provider (CSP) customers, but with low-cost and diverse passive components such as resistors and capacitors, it is almost impossible to replace them all, " said a Japanese technology company executive.

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Source: https://tuoitre.vn/my-trung-cang-thang-microsoft-va-cac-ong-lon-dich-chuyen-san-xuat-khoi-trung-quoc-20251016143057435.htm