HP is making its most ‘aggressive-ever’ plan to diversify its supply chain

is reportedly planning to move more than half of its personal computer production away from China. According to a report by Nikkei Asia, the US-based PC maker is setting up a “backup” design hub in Singapore to reduce geopolitical risks around China and Taiwan. These plans mark the company's most aggressive effort to diversify its supply chains away from Asia's largest economy.
Currently, HP makes the bulk of its PCs in China and is reportedly in talks with suppliers about the move.The report also claimed that the company is aiming to achieve its target in two to three years and has even set an internal goal of eventually making up to 70% of its products outside of China. However, the scale of the shift is expected to vary between suppliers and may depend on the complexity of the component they manufacture, the report added.

In a statement to Nikkei Asia, HP quoted a post that was shared on the company’s website by Chief Supply Chain Officer Ernest Nicolas in 2023. Discussing the company's evolving approach to supply chain management, Nicolas said: "We'll continue investing in current sites where we have longtime operations, while sometimes shifting certain production to alternate locations to create flexibility and mitigate risk for our customers.”

The company may have chosen Thailand as a major destination for the move. As per the report, at least five HP suppliers are building new manufacturing facilities or warehouse hubs in the country, while two have been increasing their capacity there since earlier this year at the company’s request.
The report also mentioned that HP is hiring engineers and managers in Singapore to create a backup team for its flagship Taiwan Design Center which is responsible for the heavy workload of development of new products and liaises with the supply chain.
An executive-level source at a supplier who remains unnamed said Nikkei said: “It is certain that HP is betting big on building a production hub in Thailand. We have other Southeast Asian facilities to support the client, but they said it is not efficient enough, so we're building a new factory in Thailand now, as requested.”
Another executive of a different component and parts supplier welcomed the move and said: “We were worried about not having enough orders to fully use our Thailand facility, but since earlier this year, we've been receiving more requests from HP to build components locally. Our business in Thailand is quite busy now.”
Meanwhile, a third source said: “HP is hiring about two hundred additional engineering staff and professionals, including electrical and mechanical engineers and supply chain experts, to turn Singapore into an alternative design hub. The move is a de-risking measure to avoid any radical scenarios involving a potential conflict between Taiwan and China.”