Trump wanted big tech to leave China. By most appearances, he is getting what he wants.
Microsoft is reportedly the latest company to start decoupling some of its business in China. The big tech giant has asked multiple suppliers to prepare “out of China” production for the company’s Surface laptop computers and data center servers, according to sources briefed on the matter who spoke to Nikkei Asia.
According to the sources, Microsoft wants to manufacture parts and components, and assemble products for new notebook computers and servers outside of China starting as early as 2026. The tech giant has already started shifting a large portion of its server production out of China in 2024, the sources said. Next on the list to be pushed outside of China is reportedly the production of Xbox consoles.
The report also alleges that Amazon Web Services is currently evaluating moving production of its AI data center servers outside of China and reducing sourcing from longtime Chinese suppliers. Meanwhile, other sources told Nikkei that Google is asking suppliers to expand server production capacity in Thailand.
Tech has been the most significant battleground in the tariff war between Washington and Beijing, and American big tech is caught in the crossfire.
Most American big tech companies have supply chains and manufacturing operations in China. All of these operations would be jeopardized if Trump follows through on his threats to impose 100% tariffs on China starting in November, as well as export controls on critical software.
Trump has been adamant about his desire for U.S. companies to decouple from China. He demanded that Intel CEO Lip-Bu Tan resign over perceived ties to China, and only backed down on his attack when the company agreed to sell a 10% stake to the U.S. government.
Trump’s attacks are similar in tone to those he wielded in his first presidency. In 2019, Trump “ordered” U.S. companies to leave their China operations.
China, on the other hand, is also using its power over these companies as a battle tactic as the trade war between the two global superpowers escalates.
Just last week, China tightened export controls on some rare earth minerals, which are the lifeline of the tech industry and are especially a key component to the production of computer chips. Beijing is also now requiring companies to obtain licenses from the Chinese government before they can export any product that contains more than 0.1% China-sourced rare earths. China mines 70% of the world’s rare earth minerals, and refines about 90%.
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