Major PC makers are shifting production back to China as costs rise — HP, Asus among firms moving work in efficiency push

HP and Asus are moving some PC manufacturing from Thailand and Vietnam back to China. Acer is also rebalancing production, and Dell is reportedly evaluating a similar move. The goal is to protect very thin margins as memory, storage, processors, and other components become more expensive.

The change is not simply about cheaper factory labor. Chinese assemblers such as Luxshare and Huaqin can undercut prices, waive engineering and tooling fees, and offer access to Chinese-made memory. China also retains an advantage in peripheral and structural parts, according to Counterpoint analyst Ivan Lam.

The shift partly reverses the industry’s China+1 strategy. TrendForce expects notebooks built outside China to fall from 24% to 21% this year. However, the move has not yet produced cheaper PCs, because component costs remain high and assembly is only one part of the total bill.

A bill of materials, or BOM, is the collection and cost breakdown of the components and materials used to build a product. For a laptop, it includes major parts such as the processor, memory, storage, display, motherboard, and structural components. It helps manufacturers understand where their money goes.

Processors, DRAM, and SSDs have become a much larger share because AI-related demand has pushed up prices for memory, storage, and other components. TrendForce estimates those three categories accounted for about 68% of a mainstream notebook’s BOM in the third quarter of 2026, compared with roughly 45% in the first quarter of 2025.

That shift leaves manufacturers less room to absorb price increases. Omdia figures cited by TechRadar Pro show memory and storage rising from about 15% of a PC’s total price to roughly 40%. Assembly savings therefore matter, but they cannot fully offset expensive core components.

Processors, DRAM, and SSDs represented roughly 45% of a mainstream notebook’s bill of materials in the first quarter of 2025. By the third quarter of 2026, their share had climbed to about 68%. The increase is therefore approximately 23 percentage points.

This means the three categories moved from slightly under half of the notebook’s component cost to about two-thirds. The article links the change to AI-driven increases in memory, storage, and other component prices. Omdia’s separate figures show a similar squeeze, with memory and storage rising from around 15% of a PC’s total price to roughly 40%.

The larger share makes notebook production harder to keep profitable. Manufacturers have fewer costs they can reduce elsewhere. That helps explain why brands are seeking cheaper assembly, lower engineering fees, better component access, and more competitive contract manufacturers in China.

The China+1 strategy means maintaining manufacturing in China while building additional production capacity in other countries. It spreads manufacturing across locations instead of relying on China alone. For PC companies, the approach became especially important after the first round of US-China trade tensions.

Companies pursued factories and assembly in places such as Thailand, Vietnam, and Indonesia. The aim was to reduce exposure to tariffs on Chinese-made goods and to create alternative routes for products bound for markets such as the United States. Asus told investors in August 2025 that more than 90% of its US-bound motherboard and PC production had shifted to those countries.

The current move partly reverses that strategy. Rising component costs and thin margins are making efficiency more urgent. Chinese assemblers are attracting work with lower prices, Chinese-made memory access, and waived engineering and tooling fees, even though tariff concerns originally encouraged production elsewhere.

Relocating assembly can reduce costs even when memory and storage prices are rising because factories compete on the remaining costs. These include assembly, logistics, engineering, tooling, peripheral parts, and structural components. Those savings can help manufacturers protect margins when the main components are expensive.

Chinese contract manufacturers are offering several advantages. They can undercut rival prices, waive engineering and tooling fees, and provide better access to Chinese-made memory. China also has an advantage in peripheral and structural parts that other countries still struggle to match. These benefits reduce the cost surrounding the processor, DRAM, and SSD.

The savings have limits. The article notes that moving assembly does not automatically make DRAM cheaper. HP, Asus, and Acer have qualified DRAM from China’s CXMT and begun shipping it in small volumes, but no cheaper PCs have yet resulted from the broader production shift.

Chinese assemblers such as Luxshare, Huaqin Technology, and Longcheer Technology are gaining PC orders because they are actively competing on price. They are courting major brands with lower bids, waived engineering and tooling fees, and access to Chinese-made memory. Their emergence gives brands alternatives when costs are under pressure.

Traditional manufacturers are shifting attention toward AI servers, which offer higher margins. Quanta, Compal, Inventec, and Foxconn have been investing capacity in that market. Servers accounted for more than 80% of Quanta’s revenue in the second quarter of 2026, according to TrendForce. A supplier focused on AI racks can afford to reject or challenge less profitable laptop work.

That balance changes negotiations. Quanta reportedly paused HP notebook production for about a week after price talks stalled, though neither company confirmed the account. Chinese assemblers now provide a counterweight, making it easier for PC brands to demand lower manufacturing costs.

DRAM is the fast working memory a computer uses while running programs. An SSD is solid-state storage that holds the operating system, applications, and user files. Both are essential laptop components, and their prices directly affect the machine’s bill of materials.

Supplier access matters because manufacturers need reliable parts at competitive prices. A factory close to memory and storage suppliers can reduce logistics costs and simplify procurement. In this case, Chinese assemblers are promoting access to Chinese-made memory, while HP, Asus, and Acer have qualified DRAM from China’s CXMT for limited notebook shipments.

The effect is especially important because processors, DRAM, and SSDs made up about 68% of a mainstream notebook’s BOM in the third quarter of 2026. A location with cheaper or easier access to those parts can offset some assembly costs. Still, the article notes that memory itself remains expensive, so supplier access does not guarantee cheaper PCs.