Big Tech’s Great Supply Chain Exit: Microsoft, AWS, and Google Look Past China

Microsoft is preparing a major transformation in its global manufacturing strategy, with plans to move most of its new product production — including Surface devices and data servers — out of China by 2026. According to Nikkei Asia, the company has instructed its suppliers to establish alternative supply chains outside China for key stages such as component production, assembly, and product finishing. This decision aims to mitigate the growing risks associated with geopolitical tensions, export controls, and tariff uncertainties that threaten the stability of global supply networks.

By 2026, Microsoft expects around 80% of the materials used in its servers to come from sources outside China. The company’s shift reflects a wider trend among US technology firms seeking to diversify supply chains and enhance resilience. Amazon Web Services is reportedly tightening restrictions on Chinese suppliers for sensitive AI server components and expanding non-China production at a deeper, component level. Similarly, Google is scaling up server manufacturing in Thailand and urging suppliers to manage full production cycles locally to reduce exposure to China-based operations.

This widespread relocation effort comes as Beijing increases its oversight of semiconductor exports and tightens controls over critical materials, further complicating trade with the US. In response, American tech firms are focusing on regional diversification and redundancy to minimize operational risks.

However, achieving complete independence from China remains difficult. China’s manufacturing ecosystem still dominates with cost advantages, skilled labor, and integrated logistics networks. Building comparable infrastructure elsewhere will demand heavy investment and years of capability development.

For Microsoft, the transition underscores a strategic intent to protect long-term operations from political or trade disruptions and to ensure its key technologies are not reliant on a single nation. Alongside AWS and Google, the company is driving a broader structural shift toward a decentralized global production model — one that balances efficiency, stability, and resilience across multiple regions.