There is still an opportunity in the global supply chain for Thailand to cater to the expansion of IT and semiconductor production bases worldwide amid the geopolitical conflict between the US and China, according to local IT experts.
According to a Nikkei Asia report published on July 18, HP is working with suppliers to shift the production of millions of consumer and commercial laptops to Thailand and Mexico this year to diversify its personal computer supply chain beyond China.
According to Nikkei Asia, sources briefed on the matter told the publication that HP, the world's No.2 PC maker by shipments, is planning to shift some commercial notebook computer production to Mexico, while a portion of its consumer laptop production will go to Thailand.
Somchai Sittichaisrichart, managing director of Thailand's IT distributor SIS Distribution, said it was "quite surprising" that HP chose Thailand as the country lacks a large number of workers and has high labour costs.
However, Thailand has strong infrastructure, particularly transportation and logistics in the air, on the road and at sea in terms of a shipping intra-network, as well as overseas. "This gives us supply chain resilience and fast delivery," he said.
Mr Somchai said the geopolitical issues between the US and China forces American firms to seek alternative sources of production as the US has increased tariffs on products imported from China, including products made by US firms in China.
"Thailand also has food, golf, along with international schools that attract foreign business leaders to move here," said Mr Somchai.
However, in term of manufacturing, Thailand should focus on promoting upstream production, product design, and assembly of high-value electronics products.
Puwanart Pientanyakij, a market analyst for device research at technology research house IDC Thailand, said Taiwan, Thailand and Vietnam have a high potential to be IT and semiconductor bases. Thailand is low risk in terms of natural disasters and has a strong geographic advantage among Asean nations, Mr Puwanart said.
He said diversification of manufacturing and suppliers helps minimise the risk of supply chain disruption and geopolitical issues. HP's decision on the production shift to Thailand might further enhance the attractiveness of the country.
Takon Niyomthai, head of IT business development at Com7, a SET-listed IT retail chain, said HP's decision reflects the fact that Thailand is one of the company's most important markets.
Meanwhile, in the HP press blog on the topic of "Global Supply Chains in the Age of Resilience" on July 17, Ernest Nicolas, chief supply chain officer at HP, said that as a global company, HP's supply chain must think in a much more holistic and interconnected way.
He added that the past few years have reinforced the point that HP must also design a supply chain for resilience. This means having a multi-source strategy for key components, as well as manufacturing capacity in strategic locations around the globe so the company is prepared for potential disruptions.
"We also continue to expand across Southeast Asia, where we have well-established manufacturing operations in Singapore, Malaysia and Thailand. We serve regional markets from factories in Japan and Brazil," said Mr Nicolas.
