AI Component Costs Push HP, Asus, and Acer to Move Some PC Manufacturing Back to China

HP, Asus, and Acer have reportedly moved some of their manufacturing capacity back into China as increasing component costs, driven by AI, bite into their margins. According to Nikkei Asia, rising bill-of-materials costs have made China's experienced workforce, relatively lower prices, and established supply chain ecosystem a more attractive option. The companies are not returning to traditional suppliers such as Foxconn, which has focused production capacity on AI data centers, but are instead signing contracts with smaller Chinese contract manufacturers.

Smaller manufacturers gain PC business

HP, Asus, and Acer are reportedly working with Luxshare, Huaqin Technology, and Longcheer Technology, which are trying to establish themselves in PC manufacturing. These contract manufacturers often have better access to memory chips from domestic manufacturers such as CXMT, according to a supply chain manager quoted by Nikkei Asia. The manager said they are telling potential clients that working with them could be a good option for securing better access to Chinese-made memory chips.

AI costs reshape supply chains

Many PC brands slowly moved out of China in 2024 and 2025 as U.S. sanctions and tariffs on China increased prices and pushed them toward friendlier nations. Those nations lack established supply chains and expertise like China, but the shift at least spreads risk as manufacturers avoid getting caught up in geopolitical tensions. Rising component prices have now forced some capacity back into China, with the AI-induced memory and storage chip shortage cited as the biggest culprit. Memory prices have climbed an unprecedented 500% in 12 months, while other parts such as PCBs and fiberglass cloth used in motherboard manufacturing are also seeing increasing prices. Acer chairperson and CEO Jason Chen bemoaned suppliers hyping shortage fears to protect margins.

Regional impact and cost pressures

Moving back some manufacturing capacity into China is easing some PC manufacturers' cost concerns, but it is also negatively impacting newly established supply chains in Southeast Asia. One manager at a PC component supplier said two new production lines built in Thailand for PC clients have not yet turned profitable because substantial orders moved back to China. Building an entire supply chain for PC manufacturing is slow and expensive, and the U.S. has been trying to accomplish this for years. Anduril has attempted to build laptops with 90% of component costs coming from the U.S. and other allied countries, and expects its devices to be around 20% more expensive than the competition. In the consumer market, PC manufacturers are likely incentivized to find the lowest possible costs to compete in pricing.

Sources: Tom's Hardware