Though with potential job cuts looming, HP plans to move 90 per cent of production out of China by 2025, tackling trade tensions, rising tariffs, and cost control.
Hewlett-Packard (HP) has announced a major shift in its manufacturing strategy, revealing plans to move 90 per cent of its production outside China by the end of its 2025 fiscal year.
This decision is primarily driven by ongoing trade tensions and the looming threat of a 10 percent tariff on Chinese imports. HP plans to strengthen its supply chain resilience and adapt to the changing global market.
With the US tariffs, consumer costs are expected to increase, particularly for new computers. To mitigate this, HP is taking proactive measures to minimise disruptions and control costs. However, these strategies come with the downside of job cuts, with up to 2000 positions expected to be eliminated.
HP CEO Enrique Lores outlined the company’s focus on enhancing its supply-chain network, stating that much work has been done to increase resilience. This marks a notable shift for the company, especially after Ernest Nicolas, HP’s chief supply chain officer, described China as one of the company’s key manufacturing and innovation hubs just last year.
In addition to relocating production, HP has also been increasing its inventory to protect against potential tariff increases. The company reported an inventory of $8.4 billion at the end of the last quarter, up from $7.7 billion. HP CFO Karen Parkhill explained that the extra stockpiling is part of the company’s tariff mitigation strategy.
This restructuring comes at a time when the PC industry faces growing concerns over the impact of tariffs. With profit margins already tight, manufacturers have limited ability to absorb additional costs.
Analysing the global market, in January, Canalys reported that HP saw a 1.6 per cent decline in shipments in Q4 2024, totalling 13.7 million units globally. Despite this drop, it maintained its position as the second-largest PC vendor. The overall market showed signs of recovery, with growth driven by demand for notebooks and an anticipated surge in 2025 due to Windows 10’s end-of-support deadline and the introduction of AI-powered PCs.
