by NICK FARRELL
March 15, 2023
At least for US products
Dell wants to break away from its dependence on Chinese manufacturing by 2027, at least for US products.
According to the Taiwanese Commercial Times, Dell's measures are part of a phased plan "inspired by geopolitical influences" which is basically the China and US trade spat which is making China look less cost friendly as it was.
The fact that China has stepped up its threats of an armed invasion of Taiwan, a major centre for semiconductor technology, components and computers, cannot have helped.
The first signs of Dell's plans to withdraw from doing business with Chinese companies came in January, when three insiders told Nikkei Asia that Dell planned to stop using chips made in China by 2024.
Dell's plans appear to follow the following timetable:
2025: Dell will begin implementing its plans to reduce reliance on Chinese components in its desktops, laptops and peripherals
2026: All crisps used in Dell products are to be manufactured by non-Chinese companies outside China. In addition, by this date, 60% of the devices sold by Dell in the US are to be manufactured outside China.
2027: By this time Dell hopes to have completed 100% of the transition so that no products sold in the US come from factories in China.
It's not entirely clear from the translations of the text and the diagram, but it seems that Dell's priority is to eliminate semiconductors made in China. The next component on the hit list will be ICs made in China by foreign companies, followed by a wave of reducing other Chinese components and replacing Chinese manufacturing of its devices.
After 2027, more than half of Dell's products sold worldwide will still be made at least partly in China. Dell ships about 50 million PCs a year, so a change in manufacturing location is neither trivial nor quick.
Dell still sells millions of PCs to Chinese consumers. According to recent reports, the company sold 1.5 million Dell and Alienware-branded PCs in the third quarter of 2022 and 1.1 million PCs in the fourth quarter of 2022. Dell's home market remains its largest, with US customers buying 4.7 million Dell PCs in the third quarter of 2022, according to a recent example.