ITHome News from October 28: According to Nikkei Asia, mainstream PC makers such as HP, Asus and Acer, under pressure from soaring component costs, are moving part of their production capacity from Thailand and Vietnam back to China, while also partnering with a new generation of contract manufacturers.
Multiple sources revealed that, driven by AI demand, memory and storage chips are in severely short supply,整机 material costs are rising, and these PC makers are seeking to improve production efficiency. China has a mature industrial workforce, lower costs, and a complete supply chain system with readily available access to components, remaining the optimal choice for computer manufacturing.
These PC makers have turned to partnering with relatively lesser-known Chinese contract manufacturers, because the larger, established ODMs are now shifting their order focus toward AI data center servers with higher profit margins. The report also said that Dell, the third-ranked US PC maker (behind Lenovo and HP), is also evaluating similar options.
An industry executive whose company supplies chips to major PC vendors said: "This adjustment is essentially driven by cost pressure. It is not just memory chips—prices of all kinds of components have risen sharply, and PC vendors are already struggling to absorb the cost increases on their own. The main reason they are moving part of their production capacity back to China and working with more Chinese contract manufacturers is that the latter's quotes are highly competitive. If the cost situation does not improve, even more production capacity will flow back to China."
Earlier, amid strained China-US relations and trade restrictions, considerable production capacity was shifted from China to Southeast Asian countries. As Nikkei Asia reported as early as 2023, Dell was one of the first PC makers to require suppliers to avoid Chinese-made components and vigorously relocate capacity to Vietnam. HP followed suit, setting a goal of moving up to 70% of its production capacity out of China. Now, the explosive demand for AI infrastructure is reshaping industry priorities.
HP, Dell, and Asus did not respond to Nikkei Asia's requests for comment. An Acer spokesperson said: "We dynamically adjust our supply chain operations to enhance resilience and maintain competitiveness. Over the years, we have consistently worked with multiple manufacturers and suppliers, maintaining a strategy of flexible adjustment."
For decades, the global PC contract manufacturing industry has been dominated by Taiwan's Quanta Computer, Compal Electronics, Inventec, and Foxconn, which are also core suppliers to Nvidia, Apple, HP, and Dell. But as the leading contract manufacturers pivot toward the more profitable and higher-growth AI server business, emerging Chinese manufacturers such as Luxshare Precision, Huaqin Technology, and Longcheer Technology are getting their opportunity. Huaqin and Luxshare Precision were already core smartphone contract manufacturers, and they also produce servers for the domestic market.
According to three people familiar with the matter, Apple's key contract manufacturer Luxshare Precision has jointly established a PC design and manufacturing joint venture with Shanghai Liulian Intelligent Technology Co., Ltd., called LuxPC Union, and over the past year it has won orders from HP, Dell, and Asus.
An executive familiar with the Luxshare PC alliance said: "The Luxshare PC alliance was established about two years ago, but its business has grown rapidly over the past year. Many leading global PC brands hope to move capacity back to China from Southeast Asia, bringing in a large volume of new orders."
In addition to mature production processes and well-trained workers, Chinese contract manufacturers are also able to source domestically produced memory chips. With the current global chip shortage, PC makers' bargaining power in securing chip supplies continues to weaken.
A computer supply chain manager said: "These Chinese contract manufacturers promote to potential customers and PC makers that working with them gives a better chance of obtaining domestically produced memory chips. They position themselves as a quality alternative, and can even help straighten out the supply chain."
Two people familiar with the matter said that representatives of emerging companies such as Huaqin and Longcheer have frequently visited mainstream PC vendors such as HP, ASUS, and Acer this year to seek cooperation, because their larger peers are busy fulfilling AI server orders.
An executive at a company that supplies HP, Dell, Asus, and Lenovo said: “For this group of Chinese domestic manufacturers, the head competitors shifting to AI servers presents a rare development opportunity. They have proactively approached internationally renowned PC brands, offering lower quotes, because everyone is being troubled by rising prices of all kinds of components.”
China has long pushed for manufacturing upgrading, focusing on the high-end electronics industry. The domestic smartphone industry chain is already highly mature, with brands such as Xiaomi, OPPO, vivo, Huawei and Transsion standing out in competitiveness and accounting for nearly 60% of the global mobile phone market. In the PC sector, local manufacturers' share is relatively limited, but according to data from research firm Omdia, the market leader Lenovo accounted for one quarter of global shipments in the third quarter, while foreign vendors such as HP, Dell, Apple, Asus, Samsung and Acer split the rest of the market.
"DRAM memory chips alone have risen in price by at least eightfold within a year, and the costs of CPUs, circuit boards and passive components have all gone up as well. Moreover, PC-related tariff measures have been paused, so naturally we are reconsidering manufacturing in China," said an executive at a gaming PC vendor. He was referring to the fact that laptops and desktops received high tariff exemptions from the United States last year.
Omdia data shows that global PC shipments from month 7 to month 9 fell 21% year over year; due to the continued impact of component shortages, the firm expects the decline to reach 24% in the fourth quarter.
According to Omdia, in the first quarter of 2025, the bill of materials cost for mainstream PCs priced at 500 to 699 US dollars (IT之家 note: approximately 3,341 to 4,670 RMB at the current exchange rate) was 435 US dollars (approximately 2,906 RMB at the current exchange rate), and by the third quarter of 2026 it had soared to 699 US dollars (approximately 4,670 RMB at the current exchange rate), pushing up end retail prices accordingly; over the same period, the bill of materials cost for entry-level models under 500 US dollars (approximately 3,341 RMB at the current exchange rate) rose from 275 US dollars (approximately 1,837 RMB at the current exchange rate) to 471 US dollars (approximately 3,147 RMB at the current exchange rate).
Counterpoint forecasts a 27% decline in shipments in the fourth quarter, with the market flat overall in 2027. Senior analyst Minsoo Kang said: "AI PCs, high-end screens and differentiated products will bring opportunities, but the ultimate winners will need to combine innovation, competitive pricing, a stable supply chain, and product value for both individual and business users."
Taiwan-based vendor Acer has handed more procurement work over to its partner Chinese contract manufacturers, with the latter responsible for sourcing components such as processors and memory, thereby easing its own procurement burden — a lightweight adjustment.
An executive at a chip development company that supplies Acer, HP, and Dell said: "In some scenarios, Chinese electronics contract manufacturers have even greater say over chip selection for PC models than smaller-scale PC vendors like Acer."
An executive at another PC company said: "HP, Dell, Lenovo, and Asus have also followed with similar practices, opening up mid-range and entry-level PC projects and letting Chinese contract manufacturers take on more component procurement work. Outsourcing these core processes has, objectively speaking, helped local contract manufacturers grow, and traditional second-tier suppliers such as Wistron Information and Great Wall Computer have benefited as a result."