The news: Recent Big Tech earnings reports from AI hardware juggernaut Nvidia and PC makers HP and Lenovo reveal the negative impact of tariffs on US-based businesses reliant on overseas manufacturing and complex supply chains. 

Tech tariffs trigger large Nvidia expense: US export restrictions on Nvidia’s H20 AI chips—imposed in April—forced the company to take a $4.5 billion charge for unsold inventory and canceled orders tied to the now-banned Chinese market.

• Nvidia anticipates an $8 billion revenue loss for the current quarter.
• HP’s shares sank 15% on Wednesday after the company missed earnings expectations and gave disappointing guidance, citing “added cost” from tariffs.
• Lenovo managed to get ahead of tariff headwinds by front loading shipments early this year, resulting in an 11% YoY increase for Q1 2025. But it faces even more uncertainty given its reliance on Chinese manufacturing.

China turmoil leads to production diversification: The increasingly volatile geopolitical tension between US and China is accelerating alternative offshore production options for Big Tech companies.

• Nvidia is embarking on an AI tour this summer to ​​Japan, Korea, India, Canada, France, the UK, Germany, Italy, and Spain to seek partnerships for AI factories. It is also investing in Taiwan.
• HP is similarly looking to expand its factories in Vietnam, Thailand, India, Mexico, and the US. By the end of June, the company expects nearly all of its products sold in North America will be built outside of China.
• Lenovo said it will shift all PC production to India within three years and plans to localize AI GPU server manufacturing in Pondicherry, India, per DigiTimes.

Key takeaway: Shifting Big Tech manufacturing from China to the US remains challenging—but moving it elsewhere can work.

The tech exodus is on, with production shifting to new global hubs. Tech firms face growing uncertainty and higher costs as they rush to unwind decades of reliance on China’s low-cost manufacturing.

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