Major tech brand Acer, Asus, and HP have reportedly shifted some of their manufacturing capacity back into China, primarily due to rising components costs, due to AI. That rising cost has also eaten into their margins.
In a report by Nikkei, the increasing AI-related costs have left these companies with little recourse, forcing them to once again bring their business back into China’s manufacturing pool. That being said, Acer, Asus, and HP are reportedly not returning into the arms of major plants like Foxconn, who has shifted production capacity towards AI datacentres.
Instead, the PC brands are expected to engage with smaller companies, including Luxshare, Huaqin Technology, and Longcheer Technology, to name a few. Luxshare, which is known for assembling iPhones, established LuxPC Union and has won orders from HP, Dell, and Asus over the past year.
Many would recall when several PC and tech brands began to slowly move their factories out of China between 2024 and 2025, due to tariffs and sanctions placed on China. The sanctions, put in place mainly by both the Biden and current Trump administrations, initially didn’t help, and the AI-induced memory and storage chip boom just made things worse.
“The move is really driven by cost pressures,” said a chip industry executive whose company supplies all major PC makers. “Prices for not only memory chips but also other components have risen so sharply that PC makers are finding it increasingly difficult to absorb the hikes. They are shifting some production back to China and working with more Chinese contract manufacturers mainly because they can offer highly competitive pricing.”
Another executive from a supplier to the major PC brands said that for many Chinese players, the AI boom has created some “golden opportunities” for them to grow. “They are sending representatives to attract more internationally renowned PC makers to work with them, offering lower prices as they know all these players are now struggling with price hikes of various components.”
As Ivan Lam, an analyst at Counterpoint puts it, China’s supply chain retains a distinct advantage in the manufacturing of other components, be it in peripheral or structural parts, and that is an area that many regions are still struggling to match the country in.
(Source: Nikkei, Tom’s Hardware)
