Microsoft has given new instructions to its network of suppliers: starting in 2026, they aim to manufacture the majority of their new products outside of China. The measure, 아직 공식적으로 발표되지 않은, is part of a broader shift within the tech sector to reduce reliance on the Chinese supply chain amidst trade tensions and export restrictions. Amazon Web Services (AWS) and Google are also accelerating this transition, according to industry sources cited in specialized press.
The scope of Microsoft’s move wouldn’t be limited to final assembly. Reports indicate the company has requested preparations for the relocation of Surface laptops and data center servers, and is pushing the change “down to the component level” (materials, parts, and subassemblies) to minimize bottlenecks and critical dependencies. An internal goal communicated to some partners is that at least 80% of related materials and production not depend on China.
From Servers to Surface… and Possibly Xbox
This shift isn’t starting from scratch. Microsoft began moving a significant portion of server production out of China in 2024 due to strategic importance for cloud and AI. Now, the plan extends to Surface and other personal computing devices, aiming for new models to be primarily manufactured in other countries from 2026. It’s also reportedly evaluating a gradual relocation of Xbox, a product with a historically China-centric supply chain.
Meanwhile, independent tech media have pointed out that Microsoft is exploring outsourcing part of the assembly of servers and Surface devices to Vietnam, Thailand, and Indonesia, following the path of other manufacturers who have already established capacity in Southeast Asia. The logic is clear: diversify locations to reduce risks of disruption, tariffs, controls, and logistical costs.
AWS and Google Step Up
This movement isn’t exclusive to Microsoft. AWS is expanding its strategy beyond just assembly to diversify component suppliers (from circuit boards to mechanical parts), a costly but critical decision when much of the value chain is concentrated in one country. Google, on the other hand, is asking partners to expand capacity outside China, with particular focus on Tailand and Vietnam. The common goal is to mitigate geopolitical and regulatory risks while increasing demand for AI servers.
Why Now: Geopolitics, Costs, and Resilience
The push for “de-risking” comes after years of trade tensions between the US and China, new export restrictions on chips and manufacturing tools, and a global race to deploy large-scale AI infrastructure. In this context, depending on a single country raises TCO due to tariffs and risks, extends timelines, and complicates capacity planning. Moving servers and laptops isn’t trivial: replacing a manufacturing plant is relatively easier than reconfiguring the component base (PCBs, connectors, chassis, memory modules, cables, fans), where China remains dominant. However, the industry is already bearing the cost of diversification as a necessary “toll” to build resilience.
Where Will the Factories Go?
The Southeast Asia region appears as a major beneficiary: Vietnam is already a hub for consumer electronics and PCs; Thailand has a tradition in hard drives and electronics; Indonesia and Malaysia are increasing capacity in assembly and testing; and India aims to attract more projects through government incentives. The specific choice depends on the maturity of the local ecosystem, electric infrastructure (critical for data center hardware), talent availability, and trade agreements with the U.S. and EU. Meanwhile, some integrators are considering Mexico for products intended for North America, though most indicators currently favor Asia.
Implications for Cloud and AI Business
The cloud and AI are core to Microsoft and AWS growth. By relocating servers and critical subassemblies outside China, cloud providers aim to:
- Achieve more predictable timelines for expanding computing capacity in key regions.
- Reduce exposure to regulatory or logistical shocks.
- Optimize fiscal and tariff costs by assembling closer to target markets.
- Enhance ESG narratives, aligning resilience and governance with corporate client and government expectations.
However, immediate advantages don’t come without drawbacks. The unit cost may rise initially due to capex for new plants, duplicated lines, and learning curves of alternative suppliers. In the medium term, the competition among manufacturing hubs and operational learning are expected to absorb these additional costs.
Technical and Operational Challenges: From “Final Assembly” to the Screw
Moving the final assembly isn’t enough if the BOM (bill of materials) remains China-dependent. That’s why Microsoft and AWS aim to go “down to the component level”: replacing PCBs and cables without changing the layout, homologating power supplies and chassis in new countries, validating memory modules and dissipation with equivalent quality, and adapting QA and environmental testing for each plant. All these steps require engineering, audits, and certifications (UL, CE, etc.) that are time and cost intensive. The advantage is that, once replicated, the multi-center model diminishes the risk of total shutdowns.
Ripple Effect Through the Ecosystem
The decision by a hyperscale or a large PC manufacturer to shift production sets off a ripple effect. Suppliers of fans, connectors, screws, cables, and packaging follow the anchor client, often forming joint ventures locally. This benefits host countries with qualified employment, technology transfer, and tax revenues, while also reconfiguring logistics routes (ports, airports, railways) and insurance and trade finance services.
What to Watch For
- Real timeline: transition dates per product family (servers, Surface, accessories) and target markets.
- Degree of “de-risking”: percentage of non-Chinese components in each BOM, not just final assembly.
- Impact on prices: initial increase in costs for laptops and servers and how margins and customers absorb this.
- Xbox continuity: pace and scope of any relocation in consoles.
- Capability in ASEAN: how fast Vietnam, Thailand, and Indonesia scale without wage or logistics tensions.
Strategic Takeaway
For Microsoft, reducing dependence on China is both an industrial decision and a geopolitical bet. For AWS and Google, it’s about safeguarding the AI expansion through multi-sourcing and lower regulatory risks. Across the sector, it signals a point of no return: after the pandemic and rising tensions, resilience now weighs as much as cost in supply chain considerations. The upcoming updates—revealing each company’s actual percentage of localization and timelines—will show whether the industry has shifted from “China+1” to a true “China+Many”.
FAQs
Which Microsoft products are planned to move out of China starting in 2026?
According to reports, data center servers and Surface laptops are leading the transition; the company is also considering changes for Xbox in the medium term.
What’s the difference between moving assembly and moving the component supply chain?
Relocating the final assembly reduces some risk, but if key components still come from China, dependency remains. That’s why AWS and others are pushing component-level diversification.
Which countries stand to gain the most from this reconfiguration?
Vietnam and Thailand are emerging as preferred destinations for laptops and servers; Indonesia and Malaysia are expanding capacity for assembly and testing. Some ecosystem players are also considering India and Mexico depending on target markets.
Who else is moving production outside China?
In addition to Microsoft, AWS and Google are accelerating their offshoring plans for products and data center hardware, citing geopolitical risks and the urgency of deploying AI infrastructure.
Key sources: Nikkei Asia (via secondary coverage and summaries) and tech outlets that track Microsoft, AWS, and Google strategies: The Verge, Tom’s Hardware, Investing.com, TechCrunch, TrendForce, among others.