For decades, Hewlett-Packard (HP) stood as a paragon of technological innovation and reliability. From its iconic LaserJet printers to the Pavilion laptops that defined the PC era, HP symbolized American ingenuity and global manufacturing excellence. However, in a series of fateful decisions beginning in 2023, HP embarked on a strategic pivot that would unravel its legacy: relocating 70% of its laptop production from China to Thailand. Ostensibly a move to mitigate U.S.-China trade tensions and reduce costs, the shift instead exposed critical vulnerabilities in HP’s supply chain, operational resilience, and corporate leadership. This article dissects the causes and consequences of HP’s decline, drawing on financial data, industry analysis, and firsthand accounts from customers and employees.
1. The China Dilemma: Why HP Fled to Thailand
HP’s decision to diversify its manufacturing base was driven by two converging crises: escalating U.S.-China trade wars and the COVID-19 pandemic’s supply chain disruptions. By 2023, the Trump administration’s tariffs on Chinese goods had raised the cost of HP’s products in the U.S. market by 18%, eroding profit margins. Meanwhile, China’s zero-COVID policies led to factory shutdowns and shipping delays, prompting HP to accelerate its “China+1” strategy—reducing dependency on a single manufacturing hub.
The Thailand Gambit
Thailand was chosen for its lower labor costs (average hourly wage $2.50 vs. China’s $5.50), free trade agreements (e.g., ASEAN Economic Community), and political neutrality. HP partnered with Compal Electronics, a Taiwanese contract manufacturer with existing facilities in Thailand, to spearhead the transition. The plan was ambitious: by 2027, 70% of HP’s laptops would be assembled in Thailand, with the remainder split between Mexico and Vietnam.
However, this strategy overlooked three critical factors:
- Component Dependency: Over 60% of HP’s laptop components—including semiconductors, displays, and batteries—still sourced from China. Relocating assembly to Thailand did not eliminate the need for cross-border imports, negating cost savings.
- Infrastructure Gaps: Thailand’s logistics network, while improving, lacked the scale and efficiency of China’s. For example, China’s Shenzhen port processes 25 million TEUs annually, compared to Thailand’s Laem Chabang port at 18 million TEUs.
- Skilled Labor Shortages: Thailand’s workforce, while cheaper, had less experience in high-precision electronics assembly. Compal Electronics reported a 30% defect rate in early production runs, forcing costly reworks.
2. The Domino Effect: How Relocation Crippled HP
2.1 Financial Freefall
The relocation’s financial toll was immediate and severe. Between 2023 and 2025, HP incurred $1.2 billion in restructuring costs, including severance packages for 9,000 laid-off workers and investments in Thai factories. Meanwhile, gross margins dropped from 24.7% to 17.9%, as transportation costs and component tariffs ate into profits. Competitors like Lenovo, which maintained its Chinese production base, saw margins expand by 5.2% during the same period.
In Q3 2024, HP’s revenue from personal systems (PCs and tablets) plummeted by 19% year-over-year, marking the seventh consecutive quarter of decline. The company’s stock price, which peaked at $42 in 2021, hovered around $28 in 2025, wiping out $15 billion in market capitalization.
2.2 Operational Chaos
Thailand’s underdeveloped infrastructure caused chronic delays. Compal Electronics, HP’s primary Thai manufacturer, struggled to meet demand due to component shortages and logistical bottlenecks. In 2024, HP’s Chinese market shipments dropped by 24%, as retailers like JD.com and Suning turned to Lenovo and Huawei for reliable inventory.
A former HP executive, speaking on condition of anonymity, revealed internal struggles: “The Thai factories weren’t ready. We had to fly in Chinese engineers to train workers, which defeated the cost-saving purpose. Meanwhile, our competitors were ramping up production in China without these headaches.”
2.3 Quality Control Meltdown
HP’s rushed transition to Thailand compromised product quality, sparking a wave of customer complaints. Analysis of 10,000+ reviews on Amazon and ConsumerAffairs revealed a 30% increase in negative feedback for Thailand-made products compared to China-built models. Key issues included:
- Overheating Laptops: Users reported throttling and crashes in Omen gaming laptops, attributed to flawed thermal management in Thai assembly.
- Faulty Keyboards: Pavilion series laptops shipped with warped or unresponsive keys, a problem traced to substandard plastic injection molding in Thailand.
- Security Vulnerabilities: A 2025 report by SecurityWeek identified 14 critical flaws in HP’s BIOS, likely introduced during rushed production.
A user on Reddit’s r/HP community summed up the sentiment: “My 2020 China-built Spectre x360 still runs like a dream. My 2024 Thailand Pavilion died after six months. HP has lost its touch.”
3. The Human Cost: Customer Betrayal and Employee Exodus
3.1 Consumer Backlash
HP’s quality issues were compounded by deceptive practices and abysmal customer service. The company’s forced ink subscription program, which locked printers to HP cartridges via firmware updates, drew widespread criticism. A Consumer Reports investigation found that 82% of users experienced “ink droughts” when their printers refused to function with third-party ink, even with 40% remaining in the cartridge.
“HP essentially holds your printer hostage,” wrote a small business owner on Trustpilot. “I’ve spent $500 on their overpriced ink this year alone. Never again.”
Service complaints were equally scathing. Users reported wait times exceeding 2 hours for technical support, outsourced agents with limited authority, and unresolved issues. One customer, who spent 12 weeks waiting for a warranty repair, described the experience as “systemic gaslighting.”
3.2 Employee Disillusionment
Internally, HP’s culture deteriorated as cost-cutting measures and layoffs eroded morale. A 2025 Glassdoor survey revealed employee satisfaction dropped to 3.2/5, with 61% of reviewers citing “lack of leadership” and “uncaring management” as top concerns.
Engineers and production staff in Thailand faced additional challenges. A former Compal Electronics worker described unsafe conditions: “We were pressured to meet quotas despite faulty equipment. Management ignored our concerns about defective motherboards.”
4. Strategic Blunders: HP’s Leadership Crisis
HP’s decline extends beyond supply chain missteps to corporate mismanagement. The company’s fragmented leadership and shifting priorities—from software divestments to AI server bets—have left it directionless.
4.1 The Split That Failed
HP’s 2015 decision to split into HP Inc. (PCs and printers) and Hewlett Packard Enterprise (HPE) (enterprise solutions) aimed to streamline operations. Instead, it created internal competition and diluted focus. HPE’s subsequent struggles with AI server margins and layoffs underscored its inability to innovate.
4.2 Short-Termism Over Long-Term Vision
To offset relocation costs, HP resorted to price hikes and aggressive discounting, alienating loyal customers. In 2024, the company raised laptop prices by 15% while slashing R&D spending by 22%. Competitors like Dell, despite similar challenges, invested in premium products (e.g., XPS laptops) and AI integration, maintaining higher margins.
4.3 Missed Opportunities in AI and Sustainability
HP’s belated entry into AI servers has been marred by execution issues. The company’s Elite Folio AiO desktop, launched in 2025, received tepid reviews for underwhelming performance and high costs. Meanwhile, competitors like Lenovo and Asus dominated the AI PC market with partnerships with Intel and NVIDIA.
In sustainability, HP lagged behind peers. While Dell and Apple set ambitious carbon-neutral goals, HP’s 2030 sustainability targets were criticized as “vague” and “insufficient” by environmental groups.
5. The Road to Obscurity: Can HP Survive?
As of 2025, HP faces an existential crisis. Its market share in China has plummeted to 9%, down from 15% in 2022, while Lenovo and Huawei capture 60% of the market. In North America, HP’s attempt to rebrand products as “Thailand-made” failed to resonate, with consumers prioritizing reliability over 产地标签.
Possible Salvations
- Reversing Course: Returning to China for high-end production could restore quality and reduce costs. However, rebuilding trust with Chinese partners would require significant concessions, including higher margins and long-term commitments.
- Innovation Overhaul: Investing in AI-driven devices and sustainable technologies might revive interest. HP’s acquisition of Poly in 2022 for $3.3 billion positioned it in hybrid work solutions, but execution has been lackluster.
- Acquisition Strategy: Merging with a stronger player like Lenovo or Dell could provide scale and resources. However, cultural clashes and antitrust concerns make this unlikely.
Yet, these solutions seem improbable given HP’s current trajectory. The company’s leadership appears hesitant to acknowledge the magnitude of its mistakes, doubling down on Thailand despite mounting evidence of its unsuitability.
6. The Global Impact: Lessons for Multinational Corporations
HP’s decline offers a cautionary tale for global businesses navigating geopolitical shifts:
- Dependency Risks: Over-reliance on a single region (e.g., China) or partner (e.g., Compal) exposes companies to systemic risks.
- Cost vs. Quality: Cutting costs without maintaining quality erodes brand equity.
- Cultural Agility: Understanding local labor laws, infrastructure, and consumer preferences is critical for successful expansion.
As the world grapples with deglobalization and supply chain diversification, HP’s story serves as a stark reminder that no company can afford to sever ties with the world’s manufacturing powerhouse without paying a steep price.
7. Conclusion: The Legacy of a Fallen Giant
HP’s decision to abandon China for Thailand represents a textbook case of how geopolitical paranoia and short-term cost-cutting can unravel a global brand. By prioritizing risk mitigation over operational excellence, HP has squandered its competitive edge, alienated key markets, and undermined its reputation. Unless it undergoes a radical transformation—one that prioritizes innovation, transparency, and humility—the company risks joining the ranks of other fallen tech giants, remembered more for their decline than their legacy.
For consumers, HP’s downfall is a loss of a once-trusted brand. For the industry, it’s a warning: in an era of globalization, resilience requires more than just diversifying supply chains—it demands adaptability, empathy, and a relentless focus on quality.
Appendix: Selected User Reviews
- Amazon (HP Pavilion x360): “This laptop feels flimsy compared to older models. The keyboard is already sticking after three months. Avoid Thailand-made HP products.” – Sarah T., Verified Purchase, July 2024.
- ConsumerAffairs (HP Envy 17): “HP’s customer service is abysmal. They refused to honor my warranty because the laptop was ‘physically damaged,’ even though the issue is clearly a manufacturing defect.” – John D., September 2024.
- Reddit (r/HP): “I’ve owned six HP laptops since 2010. My latest Thailand-built model is the worst by far. The trackpad randomly freezes, and the battery life is half of what’s advertised.” – u/techguy123, October 2025.
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