DELL logo outside an office

Dell to phase out Chinese semiconductors within a year

Image credit: DELL

Dell Technologies is planning to stop using semiconductors made in China by 2024 amid concerns over US-Beijing tensions, Nikkei has reported.

Dell is said to be taking significant steps to end its use of Chinese-made components, starting with silicon chips. 

The technology company has set out to stop using semiconductors made in China - including those produced in facilities owned by non-Chinese chipmakers - by 2024. It has also told its suppliers to reduce the amount of other made-in-China components in its products. 

The world's third-largest computer maker by shipments told suppliers late last year that it aims to "meaningfully lower" the amount of China-made chips it uses, three people with direct knowledge of the matter told Nikkei Asia.

Dell's goal is to have all chips used in its products produced in plants located outside China by 2024, they said. 

The move is the latest development in a long-running trade dispute between Washington and Beijing. 

The commercial conflict recently escalated with the publication of a new set of export controls by US President Joe Biden which included a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment. The move was interpreted as an attempt to slow down Beijing’s technological and military advances. 

Last month, the US doubled down on this policy by adding Chinese memory chipmaker YMTC and 21 "major" Chinese players in the artificial intelligence chip sector to a trade blacklist.

In light of the trade conflict, Dell has decided to take steps to separate itself from Chinese chipmakers, in a move that is reportedly also being considered as well by its rival, HP. 

"The goal is quite aggressive. The determined shift involves not only those chips that are currently made by Chinese chipmakers but also at the facilities in China of non-Chinese suppliers," one person with direct knowledge of the matter told Nikkei. "If suppliers don't have responding measures, they could eventually lose orders from Dell."

In addition to chips, Dell has asked suppliers of other components, such as electronic modules and print circuit boards, and product assemblers to help prepare capacity in countries beyond China, such as Vietnam, sources added.

"There are thousands of components for notebook computers and the ecosystem was so mature and complete in China for years," an executive at a chip supplier to both Dell and HP told Nikkei Asia.

"Previously, we knew Dell kind of had plans to diversify from China, but this time it is kind of radical. They don't even want their chips to be made in China, citing concerns over the US government's policy. It's not just an evaluation, it's not crying wolf. It's a real and ongoing plan and this trend looks irreversible."

Asked about its plans, Dell told Nikkei Asia, "We continuously explore supply chain diversification across the globe that makes sense for our customers and our business."

It also stressed that "China is an important market where we have team members and customers to serve."

The computer maker added: "To best meet our customers' and partners' needs and expectations, we have geographic diversity, flexibility and stability built into our global supply chain."

In response to the reports, an HP representative said: "We have a robust supply chain operation in China and around the world to serve our customers."

The US has restricted China’s access to semiconductor technology since at least 2019 when the Trump administration banned Huawei from buying vital US technology. In August 2022, the US further prohibited the export of four technologies tied to semiconductor manufacturing, citing how they were “vital to national security” and signed an “historic” bill aimed at boosting the domestic production of semiconductors.

In the UK, the government has ordered telecoms equipment from Chinese tech giant Huawei to be stripped out of the UK’s 5G network by 2027. 

In November last year, E&T analysed the ramifications for the world’s largest chipmaker and many other leading semiconductor stocks, as they suffered from the first major reaction to new restrictions on US exports to China.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles