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HP Inc.-laptop maker Inventec Corp. said it will to shift production of notebooks for the U.S. market out of China within months, adding to the tech industry’s exodus as the world’s two largest economies escalate their trade war.
Inventec plans to move its entire American-bound laptop operation to its home base of Taiwan within two to three months, President Maurice Wu said on a post-earnings call Tuesday. Wu’s company assembles Apple Inc.’s AirPods and produces notebook computers for HP, which accounts for an estimated third of its revenue.
Underscoring the difficulty of making such long-term production decisions, President Donald Trump said just hours later that the U.S. would push back implementation of tariffs on Chinese-made laptop and other products to December from September. But tech companies aren’t waiting for a trade resolution. From Inventec to Apple-assembler Hon Hai Precision Industry Co., Taiwanese companies that make most of the world’s electronics are reconsidering their reliance on the world’s No. 2 economy as Washington-Beijing tensions simmer.
“The trade war is very painful for us,” Wu said, concluding a call during which executives shared how production shifts have hurt the company’s efficiency and margins.
Rising tariffs on Chinese-made products threaten to wipe out their margins and up-end a well-oiled, decades-old supply chain. Microsoft Corp., Amazon.com Inc., Sony Corp. and Nintendo Co. are said to be among those now weighing their options away from the line of fire, such as Southeast Asia and India. Alphabet Inc.’s Google has already shifted much of its production of U.S.-bound motherboards to Taiwan, Bloomberg News has reported.
Inventec’s shift marks one of the most dramatic relocations since Trump announced his decision to slap 10% tariffs on $300 billion of Chinese imports -- including consumer gadgets from smartphones to notebooks -- originally slated for next month. Spurred on by clients, which include household names like Dell Technologies Inc. and Nintendo, many Taiwanese contract manufacturers are now drawing up contingency plans, shifting select assembly operations or exploring alternative venues.
Analysts anticipate the tariff delay will have little impact on those plans.
“While this announcement appears to provide incremental (and market-friendly) information as to how the White House is approaching trade policy, we do not believe it represents a substantial shift in the U.S.-China dispute,” Goldman Sachs analysts wrote in response. “Our broader expectation is that the U.S. and China are unlikely to reach a lasting agreement prior to the 2020 election that provides certainty around tariff rates on imports from China.”