United States-based technology giant Dell is now planning to stop using Chine-made semiconductor chips by 2024.
Business Insider SA reports that Dell will also slash the amount of other made-in-China parts in its products, Nikkei reported Thursday, quoting three sources with direct knowledge of the matter.
According to the report, the American tech company’s move underscores a shifting of supply chains out of China as companies seek to end their reliance on the manufacturing giant as geopolitical relations between Washington and Beijing sour, and as factory operations in China continue to be hit by the country’s Covid-19 policies.
Rated as the world’s third-largest computer maker after Lenovo and Hewlett Packard — Dell has also told suppliers that it plans to cut its use of made-in-China chips that are produced by non-Chinese firms, according to Nikkei.
Other than chips, Dell has also asked suppliers of other electronic parts — such as modules and circuit boards — to ramp up production capacity in countries outside China, per Nikkei.
“We continuously explore supply chain diversification across the globe that makes sense for our customers and our business,” Dell told the Nikkei.
While Dell did not immediately respond to Business Insider’s request for a comment sent outside regular business hours, the company’s supply chain strategy reflects growing concerns among American companies as the Joe Biden administration cracks down on China’s strategic chip sector — which Beijing is counting on, to dominate the world’s tech industry.
“However, in October the US imposed export controls on shipping equipment to Chinese-owned factories making advanced logic chips. In December, the US Commerce Department added Chinese memory chipmaker YMTC and 21 companies in China’s artificial intelligence chip sector to a trade blacklist,” reports Business Insider SA.
“To navigate Washington-China tensions, companies from Apple to Nike have been making contingency plans to shift production out of China to other low-cost locations in Asia. This is especially as Beijing’s pandemic policies drove home the uncertainty of depending on just one country for their supply chains.
“For much of 2020 to 2022, China’s strict pandemic containment measures disrupted factory operations and logistics. Even tech giant Apple was burned late last year when its iPhone output was hit by the country’s zero-Covid drive.
“And then, Beijing abruptly rolled back its zero-COVID policy, in turn triggering a wave of infections that is wreaking havoc on economic activities in China right now.”
Additionally, the extent of the outbreak in China is unclear because Beijing has stopped publishing Covid-19 case numbers and deaths from December 25. However, hospitals and funeral homes are reportedly overwhelmed.