HP, the top US computer maker, is making plans to diversify its personal computer supply chain beyond China by shifting production of millions of laptops to Thailand and Mexico. This move comes as HP aims to reduce its reliance on China and mitigate risks related to US-China tensions. The company, which is the second-largest PC maker globally after Lenovo, intends to move some commercial notebook computer production to Mexico and shift a portion of its consumer laptop production to Thailand. Additionally, HP is planning to start laptop production in Vietnam next year. The output outside of China this year is expected to be between a couple of million and 5 million units. HP’s decision to expand operations in Southeast Asia and other regions is driven by rising manufacturing costs in China and the need to better serve its primary North American market by producing in Mexico. However, HP remains committed to its operations in Chongqing, China, stating that it is an important part of its global supply chain. This move by HP follows Dell’s campaign to exclude “made in China” chips from its products and reduce its overall use of electronic components produced in China. Dell plans to manufacture at least 20% of its laptops in Vietnam this year and complete its shift away from “made in China” chips by the end of 2024. Apple has also started producing MacBooks in Vietnam this year. HP’s diversification plan will contribute to the development of a supply chain ecosystem for PCs in Vietnam and Thailand, making Southeast Asia a more attractive option for computer makers seeking production alternatives outside of China. While HP has been relatively slow in shifting production out of China compared to other US tech companies, it has been evaluating this option since 2019. The company aims to stay low-key about its plans and has been in talks with electronics component makers with production capacity in Vietnam about shipping to Thailand. HP’s decision to diversify its supply chain reflects the geopolitical uncertainties and rising manufacturing costs in China. However, the supply chain for notebook computers is deeply rooted in China, making it challenging to shift away completely. The US is the largest PC market for HP and Dell, accounting for a significant portion of their shipments, while the Chinese market represents a smaller share. Lenovo and Huawei dominate the Chinese PC market, and Dell’s diversification is driven by its control of the US government-use PC market. Supply chain diversification aims to mitigate risks related to US-China tensions and take advantage of emerging production hubs in Southeast Asian countries. While it may not directly affect American PC makers’ market share in the Chinese domestic consumer market, it could impact some government-related bids. HP’s move to diversify its supply chain aligns with the broader trend of tech companies seeking alternatives to China amid geopolitical uncertainties.