AI Cost Hikes Force HP, Asus, and Acer to Shift PC Manufacturing Back to China
AI-driven component price surges are compelling major PC makers to relocate production from Southeast Asia back to China, favoring emerging contract manufacturers over traditional giants focused on AI servers.
According to Nikkei Asia, major personal computer manufacturers HP, Asus, and Acer are moving some of their manufacturing capacity back to China as skyrocketing memory and storage chip prices, driven by artificial intelligence demand, squeeze their margins. This shift aims to leverage China's mature supply chain ecosystem and relatively lower production costs to offset rising bill-of-materials (BOM) expenses.
Notably, these brands are not returning to traditional contract manufacturers like Foxconn, which have pivoted their capacity toward AI data center servers. Instead, they are signing contracts with smaller Chinese contract manufacturers such as Luxshare, Huaqin Technology, and Longcheer Technology. These emerging players are seeking to establish themselves in PC manufacturing and claim better access to domestic memory chips from suppliers like CXMT.
Previously, many PC brands gradually moved production out of China in 2024 and 2025 to adopt a 'China+1' diversification strategy amid U.S. sanctions and tariffs. However, with AI-induced memory prices climbing 500% in 12 months and costs for other components like PCBs and fiberglass cloth also rising, the economic case for maintaining dispersed production has weakened significantly.
This reversal is impacting newly established supply chains in Southeast Asia. A manager at a PC component supplier revealed that two new production lines built in Thailand for PC clients are now idle as substantial orders move back to China, with no clear timeline for recovery. This suggests that despite ongoing geopolitical risks, immediate economic realities are reshaping the geographic landscape of hardware manufacturing.