According to a report by Nikkei Asia, major global PC manufacturers—including HP, Asus, and Acer—have begun shifting some of their production capacity back to China. This move is driven by surging prices for components like memory, fueled by high demand for AI-related technology. As the cost of the bill of materials (BOM) continues to climb and erode profit margins, China’s experienced workforce, relatively lower manufacturing costs, and mature supply chain ecosystem have once again become highly attractive to PC brands.
Shifting Away from Traditional Manufacturing Giants Toward Emerging, Mid-Tier Partners
Notably, these PC brands are not returning to traditional contract manufacturing giants like Foxconn. This is primarily because those major players have already shifted their production focus toward the highly lucrative AI data center sector. Instead, the brands are partnering with smaller, emerging Chinese contract manufacturers—such as Luxshare, Huaqin Technology, and Longcheer Technology—that are actively working to establish a foothold in the PC manufacturing space.
The report notes that, in an effort to circumvent U.S. sanctions and tariffs on China while mitigating geopolitical risks, PC brands had previously moved some production capacity to countries with more favorable political ties. Although the supply chains and technical expertise in these alternative locations are not as mature as those in China, the brands have not entirely abandoned their “China+1” diversification strategy; rather, they have adjusted their production allocations in response to current realities.
A 500% Surge in Memory Prices Makes “Local” Chip Access a Key Incentive
The primary catalyst for this return of production capacity is the severe shortage of memory and storage chips, triggered by the AI boom. According to the report, memory prices have skyrocketed by 500% in just 12 months. Costs for other materials—such as the printed circuit boards (PCBs) used in motherboards and the fiberglass fabric required for them—have also risen. In this context, Acer Chairman and CEO Jason Chen has suggested that some suppliers may be stoking fears of shortages to protect their own profit margins. Furthermore, Chinese contract manufacturers possess another key advantage: easier access to memory chips from domestic Chinese producers, such as ChangXin Memory Technologies (CXMT). A manager within the PC supply chain revealed to Nikkei Asia that these contract manufacturers are actively pitching to potential clients and brands, emphasizing that partnering with them not only secures a stable supply of Chinese-made memory but also helps streamline the broader supply chain.
Emerging production lines in Southeast Asia take a hit; the cost of moving away from China remains high.
The trend of production capacity shifting back to China has dealt a direct blow to supply chains that were only recently established in Southeast Asia. An executive at a PC component supplier candidly shared that his company had just invested in two new production lines in Thailand for a PC client; now, however, a large volume of orders has been moved back to China. Not only have these new lines yet to become profitable, but it is also unclear when—or if—the orders might return.
Establishing a complete PC supply chain outside of China remains extremely costly. Citing the United States as an example, the report notes that the defense technology firm Anduril is currently attempting to manufacture laptops with 90% of their components sourced from the U.S. and its allies—yet the projected retail price is still roughly 20% higher than competing products on the market. Such offerings are primarily limited to specific clients, such as government and military entities, for whom “supply chain security” is of paramount importance. For the general consumer market, however, cost control and maintaining competitiveness remain the top priorities for brands.