Trade Tensions and Labor Costs Push Tech Manufacturing Out of China

Major technology companies are steering away from China as their primary supplier amid
escalating trade tensions with the United States, according to a June report from Everstream
Analytics.

Tech giants such as Samsung, Apple, Dell, Nokia, and NXP have begun diversifying their supply
chains as China’s labor costs steadily rise. The report, titled Shifting Away from China, analyzed
supplier data from 2019 to 2024.

“Our analysis reveals that India, Malaysia, Thailand, Vietnam, and Taiwan have emerged as the
most prominent alternative suppliers to China for the technology industry, despite Taiwan’s own
geopolitical challenges,” the report stated.

Products most affected by this diversification include smartphones, smartwatches, computers,
and laptops—core product lines for many of the world’s leading tech manufacturers.
In an interview with the Journal of Commerce, Jena Santoro, global head of research and
analytics at Everstream, said their data shows Thailand and Vietnam have nearly doubled their
number of tech suppliers since 2019.

Santoro added that companies like HP plan to move 90% of their manufacturing out of China by
next year.

However, she emphasized that diversification is about reducing risk, not replacing China
entirely. “China has spent more than 30 years developing its manufacturing ecosystem,”
Santoro said. “Matching that scale elsewhere could take just as long.”

The Everstream report also pointed to the looming expiration of the 90-day pause on U.S. tariffs
on Chinese goods, set to end on August 14. Once resumed, the heightened tariff levels could
make many tech products prohibitively expensive if produced solely in China.

This economic pressure, combined with the rising costs of China’s labor force, has pushed
global manufacturers to seek alternative supply chains in countries perceived as offering better
long-term financial incentives and fewer geopolitical risks.