Michael Dell, billionaire founder and chief executive of one of the world’s biggest computing groups, is “intently focused” on buying components from outside China due to growing concern over supply-chain disruptions.
Speaking to the Financial Times, Dell said customers of his eponymous company were asking it to diversify where it sources components. That push comes at a time of rising tension between Washington and Beijing and after the Covid-19 pandemic exposed vulnerabilities to disruption in the production of semiconductors.
“We want to ensure the ongoing availability of products and so having a more resilient supply chain is incredibly important given the nature of the world that we live in today,” said Dell.
However, he would not be drawn on the quantity of parts Dell currently purchases from China, nor on recent reports that the company was seeking to stop using China-made chips by 2024.
Dell’s supply chain is still heavily reliant on China. Many of its components, including print circuit boards and casing, are manufactured in the country and a significant portion of its computer product assembly takes place there. The company is also one of the three largest computer vendors in China, along with Lenovo and HP.
Over the past few decades tech groups developed complex, interwoven and global supply chains. But western companies are increasingly seeking to untangle and reconfigure commercial relationships in China under pressure from the US government.
In 2019, Samsung shifted the production of its televisions and smartphones away from China and towards Vietnam. Google and Microsoft have also moved chunks of their production to neighbouring countries, while Apple has tried and struggled to expand manufacturing of its iPhones to India.
Dell, who founded his IT company in 1984 aged 19, noted that diversifying his company’s supply chain had been a priority “for a long time”. The PC and server group has manufacturing outposts in the US and China, as well as Malaysia, Brazil, India, Poland and Ireland.
The 58-year-old businessman said it was now “quite a bit more possible” to source parts from outside of China because of investments being made in Europe and the US into production of chips and other crucial components. “Certainly that’s something we’re intently focused on because there are customers that are asking for that,” he said.
After a boom in demand for computers during the pandemic, sales of PCs have declined over the past 18 months, denting the core business of Dell and rival computer manufacturers. Industry analyst IDC found that computer shipments fell nearly 30 per cent in the last quarter of 2022 to levels not seen since 2018.
“Economies around the world are moderating and wobbly,” Dell said, though he added that there were early signs demand would start to pick up again in the second half of the year as companies invest in tech upgrades, in large part to attract and retain talent.
He noted that one of the biggest drivers of growth in Dell’s infrastructure division — which accounts for nearly 40 per cent of sales — is increasing workloads for machine learning and artificial intelligence.
“If you’re an enterprise or an organisation that has a lot of data and you’re not using AI with your data, you’re already doing it wrong,” he said.
Asked about concerns from the tech and scientific community about the rapid speed at which AI systems are being developed, he said he was “more of an optimist”.
Elon Musk and more than 1,000 tech researchers and executives wrote an open letter last month calling for a pause in the development of advanced artificial intelligence systems such as OpenAI’s ChatGPT to halt what they call a “dangerous” arms race.
“We have to put the safeguards in, but for as long as humans have been around, stories have been told about unknown powers that are going to wreak all sorts of havoc,” Dell said.
“For the most part that hasn’t really happened and that’s because humans are pretty good at course correcting. I think that’s what we’ll do in this instance as well.”
Source: Economy - ft.com
