China Being Abandoned as Smartphone Factories Move Elsewhere

China has long been known as the global manufacturing hub for electronic devices, including smartphones. However, slowly but surely, the world’s technology giants are beginning to leave the ‘Celestial Empire’.

This movement was pioneered by Samsung, which completely closed its final factory in Huizhou in 2019 following a decline in market share. Following suit, Apple has begun reducing its iPhone production share in China and shifting it to India amidst intensifying geopolitical friction between Washington and Beijing.

Now, this wave of exodus is expanding. According to recent reports, Google is reportedly planning to halt all production of its Pixel hardware line in China by next year. This strategic decision covers not only smartphones but also smartwatches and earbuds.

In recent years, the search engine giant has actually been expanding its production capacity to Vietnam and India to reduce its reliance on China. Nevertheless, a “significant” portion of Pixel products is still manufactured within China.

An ambitious target to complete this transition is driven by Google’s success in producing Pixel phones independently in Vietnam this year. Given that the complexity of phone assembly is much higher compared to smartwatches or earbuds, the company is now optimistic that a full transition can be realised soon.

If this plan proceeds smoothly, Google will be recorded as the second global phone brand to completely depart from its Chinese manufacturing base, following in the footsteps of Samsung. This move is considered smoother for Google as they do not market their phone products in China at all, a similar condition experienced by Samsung at the time due to small local market share.

Amidst this supply chain transformation, Google remains aggressive in boosting its hardware business. The company is projected to be able to boost Pixel phone shipments by 8% to 10% this year, surpassing last year’s achievement of 12 million units.

To mitigate the pressure of surging memory chip prices in the market, Google has even adopted a tactical strategy by combining chip orders for its cloud computing line with its smartphone line. This move strengthens their bargaining position in direct negotiations with the trio of global memory giants: Samsung, SK Hynix, and Micron.

Furthermore, Google’s optimism is supported by projections from industry component executives. An anonymous source from the supply chain that also supplies Xiaomi mentioned that Google has a significant opportunity to capture some of Apple’s market share in key markets such as the United States, Japan, and Europe, especially if Apple eventually adopts a policy of increasing iPhone retail prices.