Microsoft is reportedly planning to shift the production of its Surface laptops, tablets, and data center servers out of China starting in 2026 at the earliest. According to Nikkei, the move will cover components, parts, and full product assembly for future Surface devices and servers. The company has already shifted some server production elsewhere and is reportedly exploring options for manufacturing more Xbox consoles outside of China.
Trade tensions between the United States and China are escalating, with new tariffs, port fees, and export controls being introduced on both sides. President Trump recently threatened China with an additional 100 percent tariff along with tighter restrictions on software exports. Beijing has also tightened rules on rare earths, a critical component in electronics manufacturing.
What is interesting is that this move from Microsoft is not exclusive to the company as other brands are also looking outside of China for their manufacturing needs. Apple, for instance, is reportedly preparing to manufacture new smart home displays, indoor security cameras, and a more advanced tabletop robot in Vietnam. This move mirrors Microsoft’s approach, as both companies aim to reduce exposure to potential trade disruptions while ensuring production continuity.
Shifting manufacturing out of China can help mitigate the impact of tariffs, shipping delays, and regulatory restrictions. For Microsoft, this is especially important as its Surface line competes in a highly competitive PC market where timing and cost efficiency directly affect margins. Servers, meanwhile, are a critical component of Microsoft’s Azure cloud business, and production continuity is crucial for supporting enterprise clients.
Of course, moving manufacturing is not trivial. Setting up production in a new country involves navigating local regulations, training staff, and ensuring supply chain reliability. There are also potential cost implications. Labor costs in Vietnam are lower than in China, but building infrastructure, sourcing parts, and managing logistics will require significant investment. Microsoft will need to balance these costs against the risks of staying in China.
For consumers though, the immediate impact may be limited. Surface laptops and tablets are unlikely to see dramatic changes in pricing or availability in the short term. However, over time, a more diversified manufacturing base could help stabilize supply chains and reduce vulnerability to geopolitical shocks. It could also accelerate innovation by allowing Microsoft to experiment with new components and designs without being tied to a single region.
