Incoming... Trump! Notebook makers ramp production to avoid next tidal wave of US trade tariffs
Manufacturing rises by double digits ahead of December D-Day
Notebook original design manufacturers ramped production in Q2 as the big brands upped their orders to swerve a US imposed trade tariff that, from December, will directly hit mobile PCs exported from China to America.
According to stats collated by IDC, contract builders in the Far East assembled 39.7 million lappies in the three months, up 11.4 per cent year on year.
"The ODMs' new production facilities weren't yet ready to mass produce in the second quarter of 2019; therefore, preparing additional inventory to avoid the impact of the USA tariffs is the main reason for the increase in shipments," said Annabelle Hsu, IDC associate research director.
The lion's share of the world's notebooks are made in Taiwan, some 82.3 per cent in Q2. Compal accounted for 30.5 per cent of global production, followed by Quanta, LCFC, Wistron and Inventec.
"Notebook PCs sold to the USA market must be produced outside China before the deadline of imposing the tariffs," said Hsu.
US president Donald Trump fired the starting gun on a trade tariff war with the Middle Kingdom a year ago, and has since initiated several more rounds, affecting hundreds of billions of dollars' worth of imported goods.
The latest 10 per cent increase will cover smartphones, notebook, monitors and other stuff like footwear produced in China that is then shipped to the US. This tariff rise was due to land at the start of September but was latterly pushed back to 15 December.
Michael Dell, head of Dell Technologies, has already branded the stand-off between the US and China governments as "unproductive" when he was on stage at VMWorld late last month.
"Our first priority is continuity of supply, and fortunately we've been able to do that," the chief executive told the assembled hacks. "We have a substantial business in China, and outside of China, that relies on a global supply chain. We have a lot of flexibility to enable our business to thrive outside of China, and inside of China."
US tech behemoths that included HP, Intel and Microsoft, in addition to Dell, also penned an open letter to the US administration, urging it to exclude lappies and smartphones from the tariff spat. The World Trade Organisation is also taking a closer look at the fun and games being played to determine if the imposition of levies break its regulations.
Many other manufacturers – from Apple to Nintendo – are already trying to shift tech production to other nations including Vietnam, the Philippines, Korea and India, something that was predicted by Canalys when all these shenanigans started a year ago.
Canalys CEO Steve Brazier warned at its EMEA conference in October that trade tariff rises are "very, very difficult for the vendors to manage... It's so uncertain, and it keeps changing."
If there is one word that characterises Mr Trump it is unpredictable, though a few others spring to mind too. ®