Dell aims to eliminate any reliance on Chinese manufacturing by 2027, at least for products sold in the US. According to Taiwan’s Commercial Times, Dell’s actions are part of a phased plan inspired by geopolitical influences.
The source claims that the above news comes from internal Dell documents. Geopolitics has apparently prompted the creation of these plans, and we believe this must be a reference to the escalating US-China tech trade tensions. In addition, China has been increasing threats of an armed invasion of Taiwan, a crucial center for semiconductor technology, components and computers. The first hints of Dell’s plans to break free of business dealings with Chinese entities came in January when three experts told Nikkei Asia that Dell wanted to stop using Chinese-made chips by 2024.
Dell’s plans would appear to follow the following timeline:
- 2025: Dell will begin executing on its plans to reduce reliance on Chinese components in its desktops, laptops, and peripherals.
- 2026: All chips used in Dell products must be made by non-Chinese companies outside of China. It is also said that there is a goal for 60% of Dell devices sold in the US to be made outside of China by now.
- 2027: By then, Dell expects to be 100% complete with its transition, with no products sold in the US coming from factories in China.
It’s not entirely clear from translations of the text and diagram, but Dell appears to be aiming to eliminate Chinese-made semiconductors as a priority. The next component on the hit list will be integrated circuits made in China by foreign companies, followed by a wave of reductions in every other Chinese component and Chinese-made replacement of their devices.
We should also remember that the Commercial Times report states that the timeline primarily refers to Dell’s US (domestic) market laptops and desktops. The report says that even after 2027, more than half of Dell products sold worldwide will still be made, at least in part, in China. Dell ships around 50 million PCs a year, so changing production locations is neither trivial nor quick. However, with these plans, Dell is moving at his own pace rather than being forced by unfortunate events.
While the geopolitically influenced strategy outlined might win some favor in the US, particularly among China hawks, it would be understandable if Dell didn’t come out and explain things the way the Nikkei and Commercial Times sources have. Dell still sells millions of PCs to Chinese consumers (opens in a new tab)with recent reports suggesting it switched 1.5 million Dell and Alienware-branded PCs in Q3 2022 and 1.1 million in Q4 2022. Dell’s home market remains the largest, with US customers who bought 4.7 million Dell PCs in Q3 2022, as a recent example.