Microsoft, AWS and Google are trying to drastically reduce China’s role in their supply chains

In light of escalating geopolitical tensions between the United States and China, leading technology companies such as Microsoft, Amazon, and Google are intensifying their initiatives to relocate production and data centers beyond Chinese borders, according to a report from Nikkei citing supply chain insiders. Microsoft aims to have as much as 80% of the components necessary for its Surface laptops, tablets, and data centers produced outside of China by 2026. This significant shift encompasses a broad range of elements, including component manufacturing and assembly for future notebook and server products. The company has reportedly begun discussions with its current partners to enhance their manufacturing capabilities in other regions starting next year. Additionally, Microsoft is exploring options to relocate some production of its Xbox gaming consoles to various locations in Asia. On the other hand, Amazon Web Services is contemplating a reduction in its procurement of printed circuit boards for its AI data centers from its longstanding supplier, SYE. They are currently assessing the necessary adjustments to their supply chain to facilitate this change. Meanwhile, Google is urging its suppliers to escalate server production in Thailand, having already established partnerships for the necessary parts and assembly operations. However, the swift transition of production away from China presents considerable challenges, given the extensive variety of components involved and the technological and manufacturing expertise offered by Chinese partners. This development follows a series of retaliatory actions from both the U.S. and China, which have imposed increasing tariffs on each other's goods, tightened export controls on essential components, and restricted tech sales. As of now, Microsoft, Google, and Amazon have not responded to requests for further comments.