Major PC manufacturers including HP, Asus and Acer are reportedly shifting some production back to China as soaring component costs, fuelled by the artificial intelligence boom, put increasing pressure on profit margins.

According to Nikkei Asia, rising manufacturing expenses have made China’s established supply chains, experienced workforce and lower production costs increasingly attractive to computer makers struggling to contain prices.

The move represents a partial reversal of the industry’s efforts to diversify manufacturing away from China amid escalating trade tensions, tariffs and geopolitical uncertainty.

During 2024 and 2025, several major PC brands expanded production into Southeast Asian countries, including Vietnam and Thailand, as part of their efforts to reduce reliance on Chinese manufacturing.

However, the rapid expansion of AI infrastructure has triggered significant shortages of key components, particularly memory and storage chips, driving up costs across the PC industry.

Memory prices have reportedly surged by as much as 500 per cent over the past 12 months, while other essential materials, including printed circuit boards and fibreglass cloth used in motherboard production, have also become more expensive.

These pressures are forcing manufacturers to reconsider where they assemble their products, with China’s mature manufacturing ecosystem offering opportunities to reduce costs.

Rather than returning to established manufacturing giants such as Foxconn, which has increasingly focused on AI data centre equipment, PC brands are reportedly turning to smaller Chinese contract manufacturers.

Companies including Luxshare, Huaqin Technology and Longcheer Technology are seeking to expand their presence in PC manufacturing by offering competitive production costs and access to established component supply chains.

Another attraction is their potential access to Chinese memory manufacturers such as CXMT, which could help PC brands secure components amid ongoing supply constraints.

However, the shift is creating problems for suppliers that have invested heavily in expanding production outside China.

One component supplier told Nikkei Asia that two newly established production lines in Thailand had yet to become profitable before customers began transferring substantial orders back to China.

Despite the changes, major PC manufacturers are not expected to abandon their broader strategy of diversifying production across multiple countries.

Instead, the latest moves highlight the growing challenge of balancing supply chain security with manufacturing costs as AI demand continues to reshape the global technology industry.

For PC manufacturers competing in the price-sensitive consumer market, China’s established production infrastructure remains difficult to match, particularly as component shortages threaten to push laptop and desktop prices higher.