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Sony and Microsoft May Reduce Console Production in China

console production reduced in china

Thanks in part to the current trade war between China and US President Donald Trump, the tech industry has been left to make some tough choices about where companies should manufacture their goods. Among some of biggest companies in the world, such as Sony and Microsoft are now reportedly looking into alternative means for hardware production, which follows earlier reports of Nintendo making similar changes.

According to a report from Nikkei, Sony and Microsoft are two of the many companies looking to significantly scale back production in China as a means of relocating manufacturing operations. Companies such as Apple, Dell, and HP are preparing for upwards of 30% less production to take place in the China region, a percentage likely to be followed by all three major console manufacturers depending on the importance of the US market. Previously, Sony, Microsoft, and Nintendo voiced their concerns on the proposed 25% tariff that could affect the price of game consoles going forward.

Nintendo has reportedly taken the first step in shifting production elsewhere, with the rumored Switch revisions being relocated from China to Southeast Asia so as to avoid having to deal with the aforementioned tariffs. As of now, the proposed tariff deal has been delayed indefinitely, though with Sony and Microsoft nearing the end of their respective console generations in the next year, the potential negative impact to consumers and retailers are still rational concerns for both parties.

Microsoft's next console, Project Scarlett, will be launching in holiday 2020, while Sony has simply said its new hardware won't be arriving until the current fiscal year's conclusion. Both systems are expected to once again push to envelope in terms of graphics and power, likely leading to a higher cost for both. If based off the original cost of both the PlayStation 4 ($400) and Xbox One ($500) when they launched back in 2013, the proposed tariff would result in both consoles receiving a hefty price hike, and would likely have a huge impact by the time the next console generation begins.

xbox sony console production in china

While the tariff on imported goods will surely impact hardware companies such as Sony, Nintendo, and Microsoft, it may indirectly alter the ever-approaching launch for Google Stadia. If consoles are going to be significantly more expensive in the near future, it's possible consumers may look into the streaming platform as an alternative means for their gaming.

Source: Nikkei (Via GamesIndustry.biz)

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