According to Commercial Times, PC giant HP is rumored to start a new wave of organizational changes in Taiwan on October 15th. In addition to the potential layoffs of 20 to 30 local employees in the R&D department, other senior managers may be subject to the adjustment as well. In response to these rumors, HP Taiwan has not provided any comments.

Business Today indicated that the restructuring of HP Taiwan may be associated with the “Taiwan+1” policy, as supply chains gradually reshuffle to Southeast and South Asia to reduce geopolitcal risks.

Previously, Dell also reduced its workforce as part of a reorganization of its sales teams, as per a report from The Business Times. On the other hand, Dell has already begun producing some of its laptops in India to serve the local market.

Tech companies are now facilitating the relocation of supply chains to reduce the impact of geopolitical risks. A report from Nikkei indicated that HP has significantly reduced the Taiwan team’s influence in procurement decisions and has created related positions in Singapore as part of a major supply chain restructuring intended to mitigate geopolitical risks.

According to Commercial Times, HP announced its adjustment plans in 2022, stating that by the 2025 fiscal year, it would reduce its global workforce by 10%, impacting 4,000 to 6,000 employees. Now, rumors indicate that HP Taiwan’s R&D department is expected to see layoffs of 20 to 30 employees, and even senior executives, including vice presidents, may be affected.

HP reported revenue of USD 13.52 billion for the third quarter of fiscal year 2024 (ending July 31, 2024), marking a 2.4% annual increase, as noted by Commercial Times. This performance exceeded Wall Street’s forecast of USD 13.37 billion and ended eight consecutive quarters of decline, signaling a return to growth.

However, its quarterly net profit was only USD 640 million, reflecting an annual decrease of 16.4%. Additionally, HP has lowered its fiscal year 2024 outlook due to intense market competition. According to Commercial Times, the company now estimates that the full-year adjusted net profit per share will be between USD 3.35 and USD 3.45, lower than its previous forecast of USD 3.30 to USD 3.60.

Business Today mentioned that HP expects that AI PCs will help stimulate market recovery. The company aims to increase AI PC shipments to about 50% of its total PC shipments by 2027, hoping to boost the average selling price by 5 to 10%.

However, Business Today also pointed out that compared to Lenovo and Dell, HP has been relatively slow in deploying AI PCs. If HP hopes to rely on AI PCs for performance growth, it may need to navigate a challenging period ahead.

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• [News] Tech Giants’ Supply Chain Reshuffle: from China to Southeast and South Asia

(Photo credit: HP)

Ahead of AMD’s October launch of Instinct MI325X, the U.S. chip giant is said to have several issues with its laptop OEMs, which results in poor execution, a report by Tom’s Hardware notes. Citing remarks from analysts, the report describes the two parties’ relation now as a “Cold War ice age,” hurting their mutual trust.

The report, citing AC Analysis, says that the main contradiction arises from AMD’s current strategy of prioritizing enterprise chips over consumer products, with laptop OEMs complaining about the “miscommunication, unfulfilled promises, and generally poor treatment.” The situation, according to them, is similar to Intel’s behavior during its peak years.

It is interesting to note that the situation seems to coincide with AMD CEO Lisa Su’s recent exclamation that AMD is a “data center-first company,” as data center contributed to over 50% of the company’s revenue last quarter.

Another report by German media outlet ComputerBase also reports that AMD is still suffering from the same challenges it has had in the past. For instance, problems with supply and related issues have delayed the release of new Strix Point laptops. According to ComputerBase, one source even accused AMD of probably leaving billions of US dollars on the table with its partners over the years.

Tom’s Hardware observes that due to the aforementioned reasons, the reaction of AMD’s Strix Point chips among OEMs has been somewhat tepid, despite consumer interest.

The report notes that currently, BestBuy offers only three brands with AMD’s latest chips—Asus, HP, and MSI. HP and MSI each have one model, while Asus has 13 models featuring the AMD Ryzen AI 300 series chip.

This is in sharp contrast with Qualcomm, the report notes. Even the company is a latecomer in the laptop market, the smartphone chip giant’s launch of the Snapdragon X processor generated significant excitement among both the public and laptop manufacturers, as seven brands have already released 12 different models featuring the new Arm chip.

AMD is also lagging behind its rival Intel, which still dominates the laptop market despite its recent slump. According to Intel, its Lunar Lake, manufactured with TSMC’s 3nm, is expected to power more than 80 new laptop designs across more than 20 original equipment manufacturers, delivering AI performance at a global scale for Copilot+ PCs.

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• [News] AMD MI325X Reported to Debut in October, Claiming AI Supercycle Has Just Started
• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera

(Photo credit: AMD)

While HP is making a move to withdraw over half of its PC production lines from China, according to a report from Economic Daily News, ODM such as Quanta and Inventec have already started setting up operations in Thailand to address their clients’ need to reduce geopolitical risks by shifting supply chain.

Reportedly, HP is planning to transfer its manufacturing base to Thailand, with the ultimate goal of having 70% of its laptops manufactured outside of China.

As early as July last year, it was rumored that HP intended to follow the example of brands like Dell and Apple in promoting supply chain diversification by moving PC production lines out of China to locations such as Thailand and Mexico.

Amid ongoing US-China tensions, ODMs have accelerated their expansion into the Southeast Asian market post-pandemic. Quanta established a plant in Thailand as early as 2019 to meet customers’ needs for diversified manufacturing sites. Currently, its Thailand facility produces servers, consumer electronics, and laptops.

Initially, Quanta’s Thailand plant primarily focused on manufacturing Chromebooks and other consumer products. However, due to lower-than-expected customer orders, Quanta expanded its server capacity and pursued laptop manufacturing orders.

With HP increasing its production in Thailand, Quanta aims to leverage its years of established presence in Thailand to secure more orders.

For the past two years, Quanta has reportedly accelerated its expansion of overseas capacity. This year, its capital expenditures are expected to increase to NTD 10 billion, up from NTD 8.8 billion last year, marking a 13.6% year-on-year increase and surpassing the 10 billion threshold. This investment will support expansion needs in Europe, the US, Thailand, and Mexico.

Inventec originally planned to assist HP with laptop production in Mexico, but with HP deciding to relocate its main production base to Thailand, Inventec has urgently rented local plant space to secure customer orders.

At the end of last year, Inventec announced a USD 152 million investment in a new plant in Thailand to produce laptops and servers. Server production line is expected to be completed by the end of this year, with operations beginning in the first quarter of next year, while laptop production line is also expected to be completed in the first quarter of next year.

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• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei
• [News] NVIDIA’s China-Exclusive H20 to Begin Pre-sales Next Month

(Photo credit: HP)

Last year, Qualcomm entered the PC market, sparking an AI PC frenzy in collaboration with Microsoft Copilot+. According to Qualcomm CEO Cristiano Amon, beyond mobile devices, PCs, and automotive applications, Qualcomm is now focusing on data centers. In the long term, these products will eventually adopt Qualcomm’s in-house developed Nuvia architecture.

Amon pointed out that as PCs enter a new cycle and AI engines bring new experiences, just as mobile phones require slim designs but must not overheat or become too bulky, Qualcomm has always been focused on technological innovation rather than just improving power consumption. While traditional PC leaders may emphasize TOPS (trillions of operations per second), energy and efficiency are also crucial.

Amon stressed the importance of maintaining battery life and integrating functionalities beyond CPU and GPU, which he believes will be key to defining leadership in the PC market. He also joked that if you use an X86 computer, it would run out of battery quickly, but with a new computer (AI PC) next year, it would last a long time without draining power.

Amon noted that Qualcomm’s Snapdragon X Elite and Snapdragon X Plus have been developed with superior NPU performance and battery life. Moreover, Snapdragon X Elite is just the first generation, which focuses more on performance supremacy, while the upcoming generations may put more emphasis on computational power, and integrating these into chip design.

Currently, more than 20 AI PCs equipped with Snapdragon X Elite and Snapdragon X Plus have been launched, including models from 7 OEMs, such Acer, Asus, Dell, HP, and others.

Amon believed that the market penetration rate will continue to increase next year. He sees AI PCs as a new opportunity, suggesting that it may take some time for them to be widely adopted when a new version of Windows for PC market emerges. However, considering the end of Windows 10 support, users can transition to new models with Copilot+, which he believes will be adopted much faster.

Amon pointed out that NPUs have already demonstrated their advantages in the PC and automotive chip industries, and these capabilities can be extended to data centers or other technologies.

He then highlighted data centers as a significant opportunity for transition to Arm architecture and expressed belief in increased opportunities for edge computing in the future. Amon also mentioned the adoption of Nuvia architecture in smartphones, data centers, and automotive industries. Additionally, he disclosed plans to launch mobile products featuring Microsoft processors at the October Snapdragon Annual Summit.

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• [News] Qualcomm CEO Reportedly Considers Collaboration with Samsung to Diversify Smartphone Chip Foundry Sources
• [News] Qualcomm Reportedly Expects No Product Revenue from Huawei After This Year, While Royalty Income Remain

(Photo credit: Qualcomm)

On October 2, 2023, the CEO of Alphabet announced that Google, under its umbrella, is partnering with the leading laptop brand, HP, to manufacture Chromebook laptops in India. This move comes at a time when Dell, Asus, and other laptop manufacturers have begun production in India. HP is leveraging its existing local factories and government incentives, aiming to capitalize on the vast population and educational opportunities in India. In a similar vein, Samsung and Google have collaborated in Vietnam to launch the Galaxy Chromebook Go, targeting the education sector. The Chromebook is gradually expanding its production and introduction to various regions.

TrendForce’s Insights:

1. Google Teams Up with HP to Launch Chromebook, Chromebook Plus Aims to Attract New Consumer Segments

Through the collaboration of HP, a dominant player in the global laptop market, and Google, renowned for its software expertise in the Chrome operating system, Chromebooks are set to be manufactured in India for the first time. This partnership leverages the power of two industry giants to produce Chromebooks locally, offering a cost-effective alternative to the long-standing dominance of white label tablets in India’s education market. Chromebooks, equipped with the Chrome OS, known for easy management and robust security, are set to benefit from government incentives and manufacturer collaborations, working together to create affordable, secure, and high-quality devices. This effort aims to enhance the learning experience for Indian students.

HP, since 2020, has been utilizing the Flex Ltd. factory in Chennai, India, for the production of laptops and desktops. On October 2, 2023, they extended their production line to include Chromebooks. The factory will assemble various types of devices, including laptops, desktops, and Chromebooks, all designed to cater to the local market’s needs. This move is expected to enhance HP’s brand value and market share in India.

In addition, Google and various leading brands launched the Chromebook Plus in the North American market on October 8, 2023. The new models come in screen sizes of 14 inches and 15.6 inches, boasting high-end hardware configurations and AI features. The base model starts at $399.99, with a price difference of less than $200 compared to conventional laptops currently sold in India. This suggests the possibility of local production for the Google Chromebook Plus in India, aiming to attract a diverse range of consumers.

2. Apart from India’s policies and incentives, Vietnam also Attracts Foreign Investment with EU Tariff Benefits and Low Labor Costs

India, with its population of 1.4 billion, presents a dual advantage of a vast labor force and a significant domestic market. After the successful local assembly of iPhones in India, the nation is taking strides toward its goal of local manufacturing. The Indian government has initiated the “Make in India” policy, aiming to entice the production, assembly, and shipment of more electronic end-products in the country. In August 2023, the Indian government announced a delayed implementation of import restrictions on computer products, with a decision pending a year later. Currently, many brand manufacturers can still import fully assembled products into India, temporarily avoiding the impact of high tariffs on imported materials and equipment. Brand manufacturers may also utilize this period to actively collaborate with the government in planning local production initiatives in the region.

Beyond India, numerous Taiwanese assembly plants have made investments in Vietnam. In contrast to India’s policy-driven approach to local manufacturing, Vietnam offers advantages such as EU tariff preferences and low labor costs. For example, Samsung has previously established its dominance in Vietnam by assembling panel modules and laptops. As a result, in collaboration with Google, they introduced the Galaxy Chromebook Go in Vietnam, targeting local markets with simplified, lower-end laptop configurations. It is speculated that other Taiwanese manufacturing plants in Vietnam will follow this operating model.

As the overall technological and industrial capabilities in Vietnam continue to improve, they are poised to take on mid to high-end laptop models by 2024-2025. While American brands continue to rely on China for the production of consumer and business laptops, the collaboration between Google Chromebook and other brand manufacturers in regions like India and Vietnam is expected to become increasingly close.