Trump tariffs push top PC makers Lenovo, HP, and Dell toward Saudi Arabia

[Alfonso Maruccia]

So Much Winning: According to multiple analysts, Donald Trump introduced his unprecedented tariff plan in an effort to force manufacturers to return to the US. If that was truly the goal, the tariffs ended up being instrumental in achieving the exact opposite outcome.

The so-called "reciprocal tariffs" imposed by the Trump administration could push major PC manufacturers to find new production hubs, and it likely won't be in the US. Earlier this month, laptop makers were already forced to halt shipments to the US due to tariff-related uncertainty and logistical chaos. Now, some of the world's largest PC brands appear to be eyeing Saudi Arabia as their next manufacturing base.

According to a recent report by DigiTimes, Lenovo, HP, and Dell are actively exploring new manufacturing initiatives in the Middle Eastern kingdom. Lenovo publicly announced its plans earlier this year, stating that the move is part of a broader strategy to diversify operations and gain privileged access to markets in the Middle East and Africa.

Lenovo's initiative is backed by a $2 billion investment from Saudi Arabia's Public Investment Fund, a massive $620 billion fund aimed at transforming the kingdom's economy beyond its dependence on fossil fuels. PIF is also expected to play a role in supporting HP and Dell's potential relocations, although progress on those fronts has been slower.

The two US-based OEMs have dispatched teams to Saudi Arabia after being approached by local government authorities. These scouting teams are tasked with assessing the situation on the ground and identifying potential sites for new manufacturing facilities. Sources indicate the new plants would likely be located near Riyadh, the capital of Saudi Arabia.

In addition, Riyadh officials have extended invitations to several original design manufacturers including Foxconn, Quanta, Wistron, Compal, and Inventec. These companies are capable of both designing and manufacturing their own products and typically require specific industrial conditions to meet their production goals. To attract OEMs and ODMs, Saudi Arabia is offering a range of exclusive incentives including covering the full cost of constructing the new facilities.

Relocating to Saudi Arabia could offer manufacturers strategic advantages amid current global economic volatility. While Donald Trump has imposed a steep 245 percent tariff on imports from China, Saudi Arabia faces a relatively modest 10 percent reciprocal tariff. For OEMs, improved access to Middle East and African markets is an appealing proposition, while ODMs may also leverage existing operations in Mexico to circumvent US tariffs altogether.

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Trump tariffs push top PC makers Lenovo, HP, and Dell toward Saudi Arabia

 

[Plutoisaplanet]

Trump tariffs are ALL about localizing manufacturing. There's nothing wrong with additional manufacturing locations being set up for the Middle East for that market. In fact, it's in businesses best interests to do the same, most just don't think that far ahead even though Covid should've prompted them to.

 

[Theinsanegamer]

Trump tariffs are ALL about localizing manufacturing. There's nothing wrong with additional manufacturing locations being set up for the Middle East for that market. In fact, it's in businesses best interests to do the same, most just don't think that far ahead even though Covid should've prompted them to.

The fragility of those supply chains was pointed out way back in the 70s, but nobody wanted to listen until they couldn't get around paying the price and a pandemic began forcing their hand.

 

[gamerk2]

Trump tariffs are ALL about localizing manufacturing. There's nothing wrong with additional manufacturing locations being set up for the Middle East for that market. In fact, it's in businesses best interests to do the same, most just don't think that far ahead even though Covid should've prompted them to.

You know these facilities are just replacing the ones in China right? They are no way just for that market.

Manufacturing is *never* coming back to the US en mass because it's too expensive. If you magically waved a wand and instantly moved all manufacturing back (completely disregarding startup costs in the process), you'd *still* have the problem where the increased cost of production would lead to fewer sales, leading to job losses as demand declines. And that's before you consider the cost of exporting, where manufacturing here essentially kills companies ability to export elsewhere.

 

[Kashim]

You can try to force companies to bring manufacturing back to the USA with tariffs and other nonsense, but most will never come back no matter what you do. Trump voters with their GED diplomas think they deserve "good" manufacturing jobs where they get to push a button 8 hrs/day in some factory and get paid $30+/hr with full benefits. Whatever little manufacturing does come back is going to struggle in the long run. How do you expect a company to stay afloat or make a profit when everything made in the USA costs orders of magnitude more than anywhere else?

Some companies WILL bring back some tiny fraction of their manufacturing simply to appease the Orange Degenerate, but won't amount to much. They'll struggle for a few years and then simply close down once this administration is gone.

 

[Kashim]

You know these facilities are just replacing the ones in China right? They are no way just for that market.

Manufacturing is *never* coming back to the US en mass because it's too expensive. If you magically waved a wand and instantly moved all manufacturing back (completely disregarding startup costs in the process), you'd *still* have the problem where the increased cost of production would lead to fewer sales, leading to job losses as demand declines. And that's before you consider the cost of exporting, where manufacturing here essentially kills companies ability to export elsewhere.

One major thing you forgot is the supply chain. Some of those supply chains take many years or even decades to establish. Trump voters think their Dear Leader can fart a genius plan into his boxers and everything will be fixed overnight.

 

[psycros]

Saudi Arabia imports lots of immigrants to work for slave wages. This is why these PC OEMs are looking hard at the Kingdom. Frankly, I don't have a problem with this as long as Chinese manufacturers aren't involved in any way. If the money is still getting funneled back to China then we have a problem. Of course, the even larger problem is the unwillingness of these incredibly wealthy manufacturers to pay line workers a living wage.

 

[ScottSoapbox]

So glad we’re all going to pay more to force companies to bring jobs to a different country.

Can’t tariff Saudi Arabia because we made ourselves dependent on their oil instead of our own.

Guess someone is playing 1D chess while thinking it's 4D.

 

[Theinsanegamer]

So glad we’re all going to pay more to force companies to bring jobs to a different country.

Here's an idea: they could make more of the goods in the largest consumer economy in the world and pay a living wage instead of using Asian slave labor to artificially depress prices.

Or, I mean, we could just keep doing what we've been doing for the last 40 years, sending our money overseas while our own people lay in destitution while our political opponents continue to become more powerful. Nothing could go wrong with that.....

One major thing you forgot is the supply chain. Some of those supply chains take many years or even decades to establish. Trump voters think their Dear Leader can fart a genius plan into his boxers and everything will be fixed overnight.

You know, you read this "oh man trump supporters dumb huehuehue his plan bad" but I dont hear any ideas coming from anyone else that are not "lets use more of other people's money for more welfare and immigrants while cranking up debt like we've been doing". Like, what other paths are there? I'd love to hear a plan better then the tariffs but so far nobody has one.

 

[Plutoisaplanet]

You know these facilities are just replacing the ones in China right? They are no way just for that market.

Manufacturing is *never* coming back to the US en mass because it's too expensive. If you magically waved a wand and instantly moved all manufacturing back (completely disregarding startup costs in the process), you'd *still* have the problem where the increased cost of production would lead to fewer sales, leading to job losses as demand declines. And that's before you consider the cost of exporting, where manufacturing here essentially kills companies ability to export elsewhere.

Humanoid robots will be cheaper than Chinese or other low wage labor. Then it’s a matter of which country has the manufacturing expertise to set up manufacturing lines for the less human friendly manufacturing processes.

Why do you think Musk and Trump at such good buddies? Musk knows how to beat China at their own game. Notice that everything Musk’s businesses are doing, China is also doing. AI, EV’s, humanoid robots, rockets… While China is winning on AI, everything else Musk’s companies are arguably winning at. Tesla has the best selling EV in China, SpaceX dominates rocket launches in the world, and Musk said two days ago that China will only have the #2-10 positions in humanoid robots: https://timesofindia.indiatimes.com...ttle-concerned-that/articleshow/120557894.cms

 

[The Talking Tech]

The cost of computing will unnecessarily increase from parts all the way to whole mainframes and to that effect services.....all thanks to Trump.

 

[ScottSoapbox]

Here's an idea: they could make more of the goods in the largest consumer economy in the world and pay a living wage instead of using Asian slave labor to artificially depress prices.

Or, I mean, we could just keep doing what we've been doing for the last 40 years, sending our money overseas while our own people lay in destitution while our political opponents continue to become more powerful. Nothing could go wrong with that.....
You know, you read this "oh man trump supporters dumb huehuehue his plan bad" but I dont hear any ideas coming from anyone else that are not "lets use more of other people's money for more welfare and immigrants while cranking up debt like we've been doing". Like, what other paths are there? I'd love to hear a plan better then the tariffs but so far nobody has one.

A) Most Americans don't want the worst factory jobs in the world. Why not advocate training so Americans can get better jobs?

B) Overseas labor isn't cheaper because of "slavery" but lower cost of living. Your logic would conclude that New York and California pay living wages while Georgia and Arkansas pay slave wages even though the factory workers in the latter two likely have more real income. This is why before Trump's first term companies were already moving factories from China to less developed countries.

C) Capitalism works via voluntary exchange. People trade money for goods and BOTH sides win. We are the largest, richest economy in the world because of free-er markets, lower taxes, and innovation. Reducing two of those hurts our economy.

D) Reducing or eliminating welfare for people and corporations would be great. So far DOGE has been mostly flash and not much actual cutting (see the previous article here where all of the waste they "eliminated" at the DOD was just reallocated to other projects for a net savings of $0).

E) Deportations of illegal immigrants would be great. The deportations of US citizens to prisons in other countries without due process is terrifying. That is new levels of the totalitarian regime that Trump claimed he was going to fight against.

 

[Megalomaniac]

Trump's tariffs are all about Anti-China.
I personally think this is not going to work. There's a reason we did business with China for so long. Not only do they have a tremendous workforce which outnumbers America's population (over 350,000,000) but they have something most of the other countries don't have.

ORDER.

Love them or hate them, the PRC keeps that country in order. Everything is done to maximize efficiency and productivity. I've lived in China before. They have created a state that forces their people to be smart and productive whether you believe in The US Bill of Rights or Not.

You won't be able to get that level of productivity from India (our next target).

Even countries China basically influenced like Vietnam and Cambodia work on that same level.

Our corporations profit, we get the manufactured goods and everyone was happy.

China has allowed Americans to live a quality of life that our own productivity doesn't justify.

Our money built their cities just as our petro dollars built Dubai, Abu Dhabi and Saudi Arabia.

I, for one, prefer capitalism and free trade.

 

[p51d007]

After WW2, America was the "king" of manufacturing. Then in the 60's, the Japanese started becoming the kings of manufacturing, because it was cheaper. As their working population started earning and demanding more money, corporations went over to South Korea. As the South Korean population started earning and demanding more money, the corporations moved over to China. Now, because of the backlash of the CCP, corporations are looking for another source of CHEAP labor.
If corporations & stockholders were not always demanding more and more and more, this wouldn't be as big of a problem.

 

[Axeia]

Imagine having your laptop assembled by an oil sheik. Just kidding, it'll go either one of two ways:
Extremely highly automated
or
Pretend it's highly automated whilst employing the same tactic that's used for construction in Saudi Arabia, lure people from low wage countries with the promise of a nice pay they can send home. Then take their passports, tell them they can have it back if they pay some amount they can never afford with what you pay them.

 

[Squid Surprise]

Wow, we want to take things away from China… and replace them with Saudi Arabia?

You think China is evil? They got nothing on the Saudis…

 

[BuckarooBonzaii]

Would be ironic that Saudi Arabia will ask China for help since they have a close relationship and are planning a strategic partnership.

 

[amghwk]

Ironic - Lenovo, a Chinese company, needs to take it's own production and manufacturing elsewhere.

The common americans are the ones who are going to pay more in the end.

 

[gamerk2]

Humanoid robots will be cheaper than Chinese or other low wage labor. Then it’s a matter of which country has the manufacturing expertise to set up manufacturing lines for the less human friendly manufacturing processes.

Why do you think Musk and Trump at such good buddies? Musk knows how to beat China at their own game. Notice that everything Musk’s businesses are doing, China is also doing. AI, EV’s, humanoid robots, rockets… While China is winning on AI, everything else Musk’s companies are arguably winning at. Tesla has the best selling EV in China, SpaceX dominates rocket launches in the world, and Musk said two days ago that China will only have the #2-10 positions in humanoid robots: https://timesofindia.indiatimes.com...ttle-concerned-that/articleshow/120557894.cms

Tesla's sales in China are cratering, and BYDs offerings are objectively superior. Not only that, BYD is already starting to displace Tesla throughout SE Asia, and even countries like Canada are starting to change their rules to allow BYD to do business.

And ignore anything Musk says; the last time his little AI robot was demoed, it was controlled by a human behind the curtain.

 

[gamerk2]

After WW2, America was the "king" of manufacturing. Then in the 60's, the Japanese started becoming the kings of manufacturing, because it was cheaper. As their working population started earning and demanding more money, corporations went over to South Korea. As the South Korean population started earning and demanding more money, the corporations moved over to China. Now, because of the backlash of the CCP, corporations are looking for another source of CHEAP labor.
If corporations & stockholders were not always demanding more and more and more, this wouldn't be as big of a problem.

But that's the thing: Capitalism demands the lowest possible cost of manufacturing, hence why companies have long done the tour of SE Asia.

What China figured out is the way to offset that is to heavily subsidize both R&D and manufacturing even as wages rise in order to keep their goods competitive on price. Which is something the US *can* do, but chooses not to.

 

[psycros]

But that's the thing: Capitalism demands the lowest possible cost of manufacturing, hence why companies have long done the tour of SE Asia.

What China figured out is the way to offset that is to heavily subsidize both R&D and manufacturing even as wages rise in order to keep their goods competitive on price. Which is something the US *can* do, but chooses not to.

And by "R&D" you mean stealing western technology. China doesn't invent a damn thing.

 

[gamerk2]

And by "R&D" you mean stealing western technology. China doesn't invent a damn thing.

"China can't develop anything on their own"; the implicit "America is superior" mindset that has to try and mitigate what everyone else does.

Yes, China steals a lot; EVERYONE does, including the US. But China spends a ton more on R&D then anyone else by a long shot, and it's starting to show in multiple emerging fields (AIs, Robotics, Battery tech, etc.). Meanwhile, the US is cutting its R&D nearly in half. Obvious outcome is obvious.

The US is going to lose (and I argue has lost in several fields) its technology edge over China.

 

[toooooot]

Trump tariffs are ALL about localizing manufacturing. There's nothing wrong with additional manufacturing locations being set up for the Middle East for that market. In fact, it's in businesses best interests to do the same, most just don't think that far ahead even though Covid should've prompted them to.

To hell with localization, what are we growing China for? They never changed, never democratized, they have not stopped threatening their neighbors since they were an authentic communist regime. They are the same country it was 30 years ago with a few cosmetic changes.
What will China do when its military power outgrows entire Western armies? Why are we helping it grow?
I know; greed, but there have to be self-preservation instincts, right?

 

[toooooot]

"China can't develop anything on their own"; the implicit "America is superior" mindset that has to try and mitigate what everyone else does.

Yes, China steals a lot; EVERYONE does, including the US. But China spends a ton more on R&D then anyone else by a long shot, and it's starting to show in multiple emerging fields (AIs, Robotics, Battery tech, etc.). Meanwhile, the US is cutting its R&D nearly in half. Obvious outcome is obvious.

The US is going to lose (and I argue has lost in several fields) its technology edge over China.

It was treated as a third world country, hence looking away by the West on their "ingenuity" in "borrowing".
This is a good time to stop it, it is a big boy now. You want to trade with us? You pay for those technologies you borrow.

 

[dangh]

To hell with localization, what are we growing China for? They never changed, never democratized, they have not stopped threatening their neighbors since they were an authentic communist regime. They are the same country it was 30 years ago with a few cosmetic changes.

yea, not like US who changing very well, not sticking to old ugly democracy, and embracing happily oligarchy:

https://www.cambridge.org/core/jour...age-citizens/62327F513959D0A304D4893B382B992B

https://www.bbc.com/news/blogs-echochambers-27074746