According to three people with knowledge of the situation, American computer giant Dell plans to stop using Chinese semiconductor chips as early as next year and reduce the number of other made-in-China components in its products, according to a story published Thursday in Nikkei.
The action highlights a shift in supply chains away from China as businesses look to reduce their reliance on the manufacturing giant as geopolitical relations between Washington and Beijing deteriorate and factory operations in China continue to be negatively impacted by the nation’s COVID-19 policies.
Chinese enterprises produce more than only chips marked “Made in China.” According to Nikkei, Dell, the third-largest computer manufacturer in the world after Lenovo and HP, has also informed suppliers that it intends to reduce its reliance on manufactured-in-China chips created by non-Chinese companies.
According to Nikkei, Dell has requested that suppliers of other electronic components, besides chips, such as circuit boards and modules, increase their production capacity outside China.
Dell informed Nikkei that the company “continually explores supply chain diversity around the globe that makes sense for our customers and our business.” Insider made a comment request outside of usual business hours, but Dell did not react immediately.
The Biden administration’s crackdown on China’s vital semiconductor sector, which Beijing depends on to dominate the global computer industry, has increased worries among businesses, as shown in Dell’s supply chain strategy.
Quit chinese processors
The US put export restrictions on equipment going to Chinese-owned facilities creating sophisticated logic circuits in October. In addition, in December, the US Commerce
Department put YMTC, a Chinese manufacturer of memory chips, and 21 other businesses in China’s artificial intelligence chip industry on a trade blacklist.
Companies like Apple and Nike have been preparing backup plans to move production out of China to other affordable sites in Asia to deal with the tensions between the United States and China. This is especially true in light of Beijing’s pandemic restrictions, which highlighted the risk of relying solely on one nation for supply chains.
China’s rigorous pandemic containment efforts affected industry operations and logistics from 2020 to 2022. Even electronics giant Apple suffered late last year as the nation’s zero-COVID effort hurt sales of its iPhones.
Then Beijing quickly changed its zero-COVID policy, which in turn sparked a wave of infections that is currently having a disastrous impact on China’s economic activity.
Since December 25, Beijing has ceased publicizing COVID case statistics and deaths, making the size of the epidemic in China unclear. Hospitals and cemeteries, meanwhile, are allegedly overburdened.