PC giant Dell will reportedly stop using Chinese chips as soon as next year, and it shows how Washington-Beijing tensions are forcing companies to diversify their supply chains

According to three sources with direct knowledge of the matter, Dell plans to stop using Chinese chips in its products as soon as next year.

The move underscores a shift of supply chains out of China as companies seek to end their reliance on the manufacturing giant as relations between Washington and Beijing sour, and as factory operations in China continue to be hit by the country's COVID-19 policies

It's not just made in China. Dell, the world's third-largest computer maker, has told suppliers that it will stop using made-in-China chips that are produced by non- Chinese firms, according to the report.

Dell has asked suppliers of other electronic parts, such as modules and circuit boards, to increase production in other countries.

According to Dell, the company continuously explores supply chain diversity that makes sense for its customers and business. Dell did not reply to Insider's request for comment.

The Biden administration is cracking down on China's strategic chip sector, which Beijing is counting on to dominate the world's tech industry.

The US imposed export controls on shipping equipment to Chinese factories. The US Commerce Department added Chinese companies to a trade blacklist in December.

Contingency plans have been made by companies to shift production out of China to other low-cost locations in Asia. Beijing's policy of using only one country for their supply chains made it hard to know which country to rely on.

China's strict Pandemic containment measures disrupted factory operations for much of the next ten years. Apple was burned late last year when it was hit by the country's zero- COVID drive.

The sudden roll back of Beijing's zero-COVID policy triggered a wave of infections that are causing havoc in the Chinese economy.

The extent of the outbreak in China is not known because Beijing has stopped publishing case numbers. Hospitals and funeral homes are not always full.

Since December 6, Beijing has only acknowledged six new coronaviruses deaths. Airfinity, a UK health data company, said on December 29 that around 9000 people die from carbon dioxide in China every day.