Sony and Microsoft may relocate console manufacturing as tensions with China rise

Both Sony and Microsoft are reportedly reducing console production in China in response to the ongoing trade war between the China goverment and the president of the United States. The news comes just weeks after similar claims about Nintendo’s manufacturing plans for its Switch system also surfaced.

The Nikkei Asian Review (via GI.biz) reports anonymous sources believe other tech companies such as Amazon, Google, Dell, HP, Lenovo, Asutek, and Acer are also reappraising their production, with many PC brands purportedly “evaluating plans to shift” manufacturing away from China. It was hoped tensions could have been eased at the recent G20 summit, but despite the truce between Washington and Beijing, multiple sources told the news outlet that the situation remained too uncertain. Fortune analysts have further intimated the truce between president Trump and Chinese president for life Xi Jinping is just the “the eye of the storm”, and the trade dispute is “unlikely to end anytime soon.”

The NAR also reports HP and Dell – which together command around 40 per cent of the global market – “are planning to reallocate up to 30 per cent of their notebook production out of China”, whilst Google looks to move its speaker manufacturing, too.

“The U.S. could be expected to feel some negative impact from the shift as “products there could be more expensive,” said Darson Chiu, an economist specialising in trade at the Taiwan Institute of Economic Research. “But China would feel the rest as the country’s economy will have to brace for a further slowdown and many factory workers need to look for jobs elsewhere.”

“China’s hiked production costs have already led to a decline in global orders,” a Chinese government official reportedly told Nikkei. “Now, the uncertainties associated with the trade war are adding insult to injury.”

“The industry consensus is to move an average of some 30 per cent of production out of China depending on how important the U.S. market is… Everyone needs to come up with a plan,” said a supply chain executive reportedly familiar with the situation. “Apple is really the very last and the slowest to start formulating plans, while everyone else out there is much more aggressive.”

Tech firms aren’t the only casualties of the U.S.’s trade war and sanctions. League of Legends recently banned players in Iran and Syria as tensions between the two countries and the United States continue to rise. The ban – which came into effect on June 22, 2019 – was rolled out as part of trade sanctions imposed by the U.S., forcing Riot to block players from sanctioned countries. 

“Due to U.S. laws and regulations, players in your country cannot access League of Legends at this time,” the log-on message stated at the time. “Such restrictions are subject to change by the U.S. government, so if and when that happens, we will look forward to having you back on the rift.”