HP, Asus and Acer are reportedly moving some PC manufacturing back to China. The shift is driven by rising component costs, fuelled by demand for AI hardware, which are eating into margins in a market where the final price matters more and more.
According to Nikkei Asia, the appeal of China lies in its experienced workforce, relatively low production costs and an established supply chain. The brands are not returning to large contractors such as Foxconn, which have concentrated capacity on AI data centers. Instead, they are signing contracts with smaller Chinese contract manufacturers such as Luxshare, Huaqin Technology and Longcheer Technology, which are trying to establish themselves in PC manufacturing.
The biggest problem is the shortage of memory and storage chips, also caused by AI. According to the report, memory prices have risen sharply over the past twelve months. Other parts, such as PCBs and the fiberglass cloth used in motherboards, are also getting more expensive. Acer chairman and CEO Jason Chen has complained about these increases and the need to protect margins.
China also offers an additional advantage: local manufacturers have easier access to Chinese-made memory chips, such as those from CXMT. A supply chain manager in the sector told Nikkei Asia that these contract manufacturers are pitching themselves to clients as a way to secure better access to Chinese memory.
The move, however, carries a cost for the supply chains built in Southeast Asia in recent years. A manager at a PC component supplier said the company had built two new production lines in Thailand for these clients, which are now seeing substantial orders moved back to China. Those lines are not yet profitable, and it is unclear when they will be refilled.
Building a PC supply chain from scratch is slow and expensive. The United States has been trying for years and, so far, only Anduril appears to have managed it, with devices aimed mainly at critical sectors such as government and the military. Companies selling PCs to the consumer market, by contrast, are pushed to find the lowest possible costs in order to compete on price.
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