Alphabet Inc.’s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google is reportedly relocating all production of its Pixel products from China by 2027, amid growing tensions between Washington and Beijing.
Google has informed its suppliers that it plans to manufacture all Pixel smartphones, watches, and wireless earbuds outside China starting next year. The company has been progressively expanding capacity in Vietnam and India to reduce its dependence on China, despite a significant share of its production still being located there, reported Nikkei Asia on Tuesday.
Google’s success in making premium Pixel phones in Vietnam has reinforced its plan to move all Pixel production out of China by 2027, sources told the publication.
Google could become the second major smartphone brand after Samsung Electronics Co. (OTC:SSNLF) to shift production out of China, with its limited presence in the Chinese market making the move easier than Apple Inc.’s (NASDAQ:AAPL).
Google did not immediately respond to Benzinga’s request for comments.
Google Holds Its Ground Amid Rising Chip Costs
The rising cost of components, particularly memory chips, has been a significant pressure point for smartphone manufacturers. This has led to increased handset prices in major markets like the U.S. and China, impacting consumer demand.
Despite soaring memory chip prices, Google expects Pixel smartphone shipments to rise 8% to 10% this year from roughly 12 million units last year. To strengthen its negotiating position with Micron Technology Inc. (NASDAQ:MU), Samsung and SK Hynix Inc – ADR (NASDAQ:SKHY), the company is bundling memory chip orders for its cloud computing operations with those for its smartphones.
Apple and Huawei are among the few smartphone makers still targeting shipment growth amid the global chip crunch, while Xiaomi, Oppo and Vivo have repeatedly cut their forecasts as soaring memory-chip and component costs squeeze the industry.
Google has been more cautious about raising prices on existing models than Samsung and Motorola, helping its midrange Pixel lineup stay competitive. Counterpoint Research’s Gerrit Schneemann told Nikkei that Google’s U.S. promotional strategy has translated into stronger sales, while the premiumization trend and attractive pricing of the Pixel 9a and 10a are supporting demand amid pressure in prepaid segments.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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