Microsoft Surface and data center production to be moved out of China by 2026, claims report — components, parts, and assembly of laptops and servers moving to counter trade war uncertainty

A new report claims that Microsoft wants to completely move all of its new product manufacturing outside of China, with the production of its Surface product line and data centers aimed to be built exclusively in other countries beginning in 2026. Nikkei Asia reports that the U.S. tech company is doing this to avoid the uncertainty caused by the U.S.-China trade war and Beijing’s ambitions on Taiwan. Amazon Web Services (AWS) is also said to be following suit, with the company shifting its supply chain away from the East Asian country all the way to the component level.

“The scope is quite wide and covers components, parts, and product assembly for new product introductions of both notebook computers and server products,” a supply chain executive told the publication. “Microsoft hopes all of these can be manufactured outside of China starting from 2026 at the earliest.”

Redmond began its shift away from China last year, starting with server production, owing to the sensitivity of these products. One source claims that Microsoft wants a maximum of 20% of the supply chain for these items to come from China. It also wants to do the same for its Xbox consoles, but in a more gradual manner.

“Moving assembly is rather easy, but [shifting production] down to the component level is radical and very challenging, especially with a timeframe like 2026,” said another Microsoft supplier exec. “We need to see how this ambition will be carried out.” Many companies are already moving their assembly lines out of China, especially after President Donald Trump announced high tariffs on Chinese imports. However, it’s going to be significantly more difficult to source components outside of China and/or Chinese companies, especially as they are long-time suppliers of some of these companies.

Washington and Beijing’s trade war is slowly pushing companies away from China. Although the U.S. primarily intends semiconductor manufacturing to go back within its borders, nations in the Southeast Asia region are also benefiting from the rivalry. Many companies are moving their supply chains to Thailand, Vietnam, and Indonesia to escape the prohibitive import taxes placed on Chinese goods. Even though these nations also have tariffs placed on their exports, they’re relatively much smaller, plus their relationship with the U.S. is far more stable.

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