(Reuters) - Dell Inc (DELL.O: Quote, Profile, Research) plans to buy $23 billion of components from China this year and $29 billion in 2009, helping it reduce costs while the company's main market, the United States, is facing recession.
The commoditization of computer hardware means competition is more a function of price and efficiency than quality and branding, making China a favorite place to source a broad range of goods, including electronic components.
"China is critical to Dell's global supply chain," founder and Chief Executive Michael Dell told reporters on Thursday.
"Dell will purchase $70 billion of computer-related supplies and equipment from China," he said, referring to total purchases over the 2007-2009 period.
The world's second-largest personal computer maker, Dell is far from alone in looking to China to reduce manufacturing costs and remain competitive.
Last November, Cisco Systems Inc (CSCO.O: Quote, Profile, Research) said it would almost double its purchasing from Chinese suppliers over five years to $16 billion.
Cisco is the biggest maker of routers, switches and other equipment that make up the Internet.
Hardware makers such as Dell, Cisco and Hewlett-Packard (HPQ.N: Quote, Profile, Research) (HP) could be hit hard by a U.S. economic downturn, Dell even more so because it relies on the U.S. for about half of its revenue, a much higher proportion than larger rival HP.