Sources: Google is moving some production of US-bound Nest thermostats and server hardware out of China to Taiwan and Malaysia, avoiding punitive US tariffs
Context & Ripple Effects
This 2019 report is the opening move in what became a decade-long unwinding of Google's China-centered hardware footprint. Tariffs on US-bound goods pushed Nest thermostats and server hardware to Taiwan and Malaysia first; the US campaign to cut China out of supply chains then widened the pressure to peers like Apple.
The endpoint is visible in the later coverage: Google told suppliers it plans to move all Pixel phone, smartwatch, and earbud manufacturing out of China in 2027 (the full consumer-hardware exit), and it anchored its biggest AI infrastructure engineering hub outside the US in Taipei. What started as tariff avoidance hardened into structural separation.
First-order effects
- Google's US-bound Nest thermostat and server hardware lines shift to Taiwanese and Malaysian factories, directly insulating those products from punitive tariffs while raising unit costs versus Chinese production.
Second-order effects
- Contract manufacturers in Taiwan and Malaysia gain order volume at their Chinese counterparts' expense, and the tariff math forces the same recalculation on rivals — Dell and HP later asked their Taiwanese suppliers to boost AI-related hardware output in Mexico (the Mexico pivot).
Third-order effects
- If the pattern holds, US-bound consumer and data-center hardware consolidates around a China-free production tier spanning Taiwan, Malaysia, and Mexico, with Google's Taipei hub signaling that engineering investment follows the manufacturing shift rather than preceding it.
The trend: US-China trade friction is converting hardware supply chains from a single China-centered base into a geographically split system, with each tariff round pushing another product category across the boundary.