HP and Asus Shift PC Production Back to China Amid Component Cost Pressures

HP and Asus are quietly reversing part of their supply chain diversification efforts, moving select personal computer manufacturing lines out of Thailand and Vietnam and back into China. The strategic pivot comes as soaring component costs, heavily influenced by AI-driven price spikes in processors, DRAM, and storage, squeeze hardware profit margins. Industry reports indicate that Acer is also rebalancing its output, while Dell evaluates similar moves to combat ballooning bills of materials.

The financial strain is starkly evident in component pricing data. Market intelligence firm TrendForce notes that processors, DRAM, and solid-state drives accounted for roughly 68 percent of a mainstream notebook's total bill of materials in the third quarter of 2026, marking a dramatic increase from about 45 percent early last year. Concurrently, data from Omdia shows memory and storage climbing from roughly 15 percent of a computer's total price to nearly 40 percent, leaving hardware manufacturers scrambling to find savings in assembly, logistics, and engineering.

Instead of returning to traditional manufacturing partners, major brands are turning to Chinese contract assemblers such as Luxshare, Huaqin Technology, and Longcheer Technology. Traditional PC manufacturers have increasingly shifted their industrial capacity toward lucrative AI servers, leaving traditional ODMs with less patience for thin-margin laptop contracts. Chinese assemblers are capitalizing on this shift by offering aggressive pricing, waiving engineering and tooling fees, and providing local access to Chinese-made memory chips like those from CXMT.

Market analysts project that the global share of notebooks built outside of China will dip from 24 percent to 21 percent this year, potentially dropping below 20 percent in the near future. While brands are chasing much-needed cost efficiencies, the reversal leaves component suppliers that previously invested in new manufacturing lines across Southeast Asia facing prolonged financial losses with idle capacity.