Dell reportedly has significantly increased its desktop component supply from China-based players for 2016 and is planning to increase the supply share to above 70% in 2017, looking to reduce costs and tighten its relationships with local governments for a better chance to land procurement orders, according to sources from the upstream supply chain. However, the news has not been confirmed by Dell.

The sources pointed out that Dell is planning to increase its purchasing from China and the proportion will be increased to 50% and the strategy is deriving specifically from chairman Michael Dell since China supply chain's component quality has been improving and Dell is also looking to strive for more procurement orders from the China government.

Prior to Dell, first-tier brand vendors including Hewlett-Packard (HP), Acer and Asustek Computer have already begun to outsource their orders to China supply chain or ODMs. Asustek also outsourced some of its mainstream notebook models to China-based BYD at the end of 2015.

Since desktop products are already mature, China suppliers are capable of supplying components such as cooling modules, chassis, power supplies and cables, but notebook components are still mainly supplied by Taiwan makers. However, China supply chain is growing rapidly and has become a strong threat to Taiwan makers, the sources noted.

The sources are concerned that Dell's strategy is likely to extend to its notebook and server businesses in the future and Taiwan's orders from Dell will be further impacted.

Dell is currently performing stably and seeing a growing market share thanks to its strong enterprise client base and with the North America economy recovering and Dell's strong performance in Asia Pacific, the US vendors' market share is likely to continue climbing.