Google and Microsoft move production from China at high speed26. February 2020
Google and Microsoft move production from China at high speed
Google and Microsoft are accelerating their efforts to move production equipment to Southeast Asia in the face of the growing threat of corona virus in China. Factories in Vietnam and Thailand will be favoured, reports Nikkei Asian Review.
Google and its partners in North Vietnam plan to start production of its latest low-cost smartphone, which is expected to be called Pixel 4A, in April. Google also plans to produce a flagship next-generation smartphone there – the Pixel 5, as it is expected to be called. It could then be delivered directly from the Southeast Asian country in the second half of 2020.
Google has also asked a long-standing manufacturing partner to prepare the production lines in Thailand for its “smart home” products, including voice-activated smart speakers such as the Nest Mini. The first products are expected to be delivered in the first half of 2020.
Microsoft, which began its push into PC hardware in 2012, plans to begin production of its Surface line, including notebook and desktop computers, in North Vietnam in the second quarter of this year at the earliest. “Volume in Vietnam would be low at the beginning, but output will increase, and that is the direction Microsoft wants,” said a supply chain manager.
“The unexpected coronavirus outbreak will definitely prompt electronics manufacturers to continue looking for production capacity outside their most cost-effective manufacturing base in China,” said a supply chain manager. “No one could ignore risks after that. … It’s about more than just costs – it’s about the continuity of supply chain management.”
Compared to hardware-oriented technology brands like Apple, HP and Dell, internet companies like Google and Microsoft are able to move production from China, the world’s largest electronics manufacturing centre, much more flexibly, three supply chain managers told Nikkei. “These relative hardware newcomers really have a feel for the crisis since the ‘trade conflict’ between the US and China.
Google even asked its suppliers to examine the feasibility and cost implications of uninstalling some production equipment and shipping it from China to Vietnam by land, sea or air.
Google and Microsoft have a much lower burden than hardware heavyweights like Apple. Compared to Apple, which sells nearly 200 million smartphones annually, Google only shipped 7 million units in 2019, according to IDC. Microsoft’s entire Surface range delivered only 6 million units worldwide last year, far fewer than Apple’s 17 million PCs.
Last year, Google started to move part of its production out of China. It asked one of its partners to convert an old Nokia factory in the North Vietnamese province of Bac Ninh to take over the production of pixel phones.
Another factory in the North Vietnamese province of Vinh Phuc was also selected by Google to manufacture smartphones. Google also moved server production from its data centre to Taiwan last year in collaboration with several partners, and began manufacturing other smaller smart home products in Vietnam at the end of last year.
The Vietnamese government suspended the entry of Chinese nationals and foreigners who have visited China in the past 14 days in early February to prevent the virus from spreading. Hanoi has also suspended passenger flights to and from China and train services between the two countries, posing additional challenges for suppliers if they are to supply components to the South East Asian country.