Google is moving server hardware out of China to avoid US tariffs

Google has already shifted much of its production of US-bound motherboards to Taiwan, averting a 25% tariff, said the people, asking not to be identified discussing internal matters.

Alphabet Inc.’s Google is moving some production of Nest thermostats and server hardware out of China, avoiding punitive US tariffs and an increasingly hostile government in Beijing, according to people familiar with the matter.

Google has already shifted much of its production of US-bound motherboards to Taiwan, averting a 25% tariff, said the people, asking not to be identified discussing internal matters. While US officials have pinpointed Chinese-made motherboards as a security risk, Google didn’t bring that up during discussions with its suppliers, they said. Tariffs have also pushed American-bound production of its Nest devices to Taiwan and Malaysia, the people said.

The migration is taking place as companies both foreign and domestic seek to pivot their production away from China amid US President Donald Trump’s efforts to reset the perimeters for global trade and manufacturing. Beijing is showing growing signs also of clamping down on American corporations from Ford Motor Co. to FedEx Corp. within the world’s largest consumer market and production base.

That’s prompting US companies, long accustomed to using China as the world’s workshop, to explore alternatives. The Taiwanese contract manufacturers that make most of the world’s electronics, including Apple Inc. partner Foxconn Technology Group, have since 2018 accelerated the shift at their clients’ behest. Foxconn said on Tuesday that it has enough capacity to make all iPhones bound for the US outside of China if necessary, although Apple has so far not asked for such a shift.

While Google’s hardware production in China pales in comparison to the likes of Apple, its shift may herald a broader trend as tensions between Beijing and Washington escalate. The US search giant earns some advertising revenue from the country and had explored avenues to court consumers and corporations in the world’s No. 2 economy, from sharing artificial intelligence tools to even a censored search service. It’s also lobbying Washington for permission to continue supplying Android to Huawei Technologies Co., the Financial Times has reported.

It’s widening its footprint elsewhere: Google announced in March it’s creating a new campus in Taipei and expanding staff on the island, though it’s unclear whether that’s related to its manufacturing diversification. Google declined to comment on production adjustments.

Business Standard