Microsoft said to produce most new products outside China from 2026

Microsoft is planning to shift most production of its new laptops and servers outside China as soon as 2026, according to a report.

The company has reportedly asked several suppliers to prepare for manufacturing Surface devices and data center servers, including major components and assembly, in locations beyond China.

This move comes amid ongoing efforts by Microsoft to reduce reliance on China’s supply chain due to persistent tensions between the US and China.

🔗 Source: The Information

🧠 Food for thought

Implications, context, and why it matters.

Southeast Asia benefits from the server production shift

Microsoft ships about 4 million Surface PCs each year 1 and plans to move data center server builds outside China by 2026 2.
Thailand is becoming a hub for server assembly, with Quanta and Inventec planning surface-mount technology (automated component placement) lines there 3. Quanta will invest about $25 million to expand its Thailand plant for server work 4.
Vietnam hosts Foxconn’s main server production outside Taiwan 4. Nintendo has confirmed partial Switch output there as a diversification move 5.
Original Design Manufacturers (ODMs) from Taiwan are adding capacity across the region to serve AI servers 4. That includes Foxconn, Quanta, Wiwynn (a server manufacturer) and Inventec 4. Foxconn Industrial Internet (a Foxconn subsidiary focused on industrial and smart manufacturing) supports the Vietnam plant as a main hub 4.

ODMs and suppliers can win work by building early in Southeast Asia

Suppliers that co-locate or reserve capacity with ODMs in Vietnam, Thailand, and Malaysia can win near-term AI server orders 4.
Investors get a reliable grid in Thailand with tax breaks and simpler permits 6. Early movers can set up before bottlenecks form.
Southeast Asia’s data center market is set to grow from $13.71 billion in 2024 to $30.47 billion by 2030 6.
Printed Circuit Board (PCB) suppliers moving to Thailand can secure favorable terms with ODMs that need local parts to meet schedules, including Microsoft’s move by 2026 3 2.
Logistics firms (freight forwarders and warehouse operators) can set dedicated routes between Southeast Asian plants and Microsoft’s distribution networks. These firms can open warehouses near those routes before rivals move in.