Cisco minimises China manufacturing as trade war rumbles on

CEO Robbins reveals change in earnings call, as revenue rises

Cisco has shaken up its supply chain to minimise the manufacturing it carries out in China after tariffs rose again.

Speaking on an earnings call for the vendor's Q3 results, CEO Chuck Robbins said the firm has taken steps to mitigate any adverse effects from the increases.

China revealed last week that it would be hiking tariffs from 10 per cent to between 20 and 25 per cent for some products.

"If you remember back many months ago when the 10 per cent tariffs were announced we said, we had basically three phases to our strategy," Robbins explained. "The first was we would continue the dialogue with the administration to make sure they understand the impact.

"The second is, we'll continue to do what we've always done which is optimise our supply chain, which we've been doing for the last 20 years.

"And then the third is, we will make pricing adjustments where necessary if needed. I'll tell you that the team has been working incredibly hard over the last six months.

"And so last week when we saw the indication that the tariffs were going to move to 25 per cent on Friday morning, the teams kicked in and we actually have executed completely on everything that we need to do to deal with the tariffs."

Robbins said that, because of the plans that have been implemented, Cisco expects to see "very minimal impact" from the tariff increases.

Cisco's chief financial officer Kelly Kramer added that the vendor still has some manufacturing occurring in China, but said that Cisco has "greatly, greatly, reduced [its] exposure" working with suppliers.

For the quarter ending 31 March Cisco saw sales rise four per cent to $12.96bn (£10.1bn), while operating income climbed to $3.5bn.

Sales in EMEA, meanwhile, were up five per cent to $3.4bn.

Robbins said that Cisco has "completed the most comprehensive enterprise networking portfolio refresh in our history" with its Catalyst 9000 portfolio.

He also talked up the vendor's relationship with the big three public cloud vendors, in particular the recently announced partnership with Google and its Anthos platform.

In security, Cisco reported sales growth of 21 per cent, up to $707m.