With the US–China trade war heating up and Donald Trump threatening steep punitive tariffs that could make Chinese-made products uncompetitive, several American tech giants are seriously considering shifting production out of China.
According to Nikkei Asia, Microsoft has already decided to move manufacturing of most new products; including Surface laptops and data center servers; outside of China, possibly as early as 2026.
The company has asked its suppliers to explore alternative locations not only for final assembly but also for key components and sub-assemblies.
Amazon Web Services (AWS) is reportedly pursuing a similar strategy, shifting its AI data server production away from China. Though long-standing supplier relationships pose some hurdles, the company is weighing replacement options to reduce dependency.
Meanwhile, Google is focusing on Thailand as a key manufacturing hub for its server infrastructure. The tech major has urged suppliers to ramp up server production capacity and build new facilities in Thailand, creating an alternative ecosystem outside China.
The big question now is: Will India benefit from this exodus?
India has positioned itself as a viable alternative through its “Make in India” initiative, PLI schemes, and liberalized FDI norms.
The country is also investing heavily in industrial corridors, SEZs, and electronics manufacturing clusters, aiming to attract global tech manufacturing.
Adding to the appeal, India’s demand for cloud, AI infrastructure, and data centers is booming. AWS has already pledged $12–13 billion by 2030 for its cloud infrastructure, while Google has announced a $15 billion investment in a new AI data center hub in Visakhapatnam.
Challenges Ahead
Despite its advantages, India faces logistical and infrastructural bottlenecks. Poor roads, inadequate port infrastructure, low productivity, and delays in freight corridors continue to pose serious challenges.
Additionally, unreliable power supply and utilities increase operational costs, making India less competitive than some Southeast Asian nations.
The Bottom Line
As US tech majors reduce their dependence on China, India is in a prime position to emerge as a major alternative hub.
But to secure these investments, the country must address its infrastructure gaps quickly and effectively. If it does, this shift could mark a transformative moment for India’s tech manufacturing landscape.
