HP of the US and Taiwan's ASUS and Acer are moving part of their PC production from Thailand and Vietnam back to China and bringing on new contract manufacturers, Nikkei Asia reported on October 28, 2026. With prices for PC components soaring on the back of expanding AI-related demand, the three companies are reportedly trying to cut production costs.
The move goes beyond a simple relocation of production sites. Contract manufacturers that assemble products on behalf of PC makers are also seeking new customers, and PC makers are looking for new suppliers. In other words, it is a review of procurement strategy that covers not only which country to produce in, but also which company to entrust with manufacturing. Even if manufacturing costs fall, however, the savings may not show up in selling prices, depending on component procurement prices and inventory levels.
Part of production shifts from Thailand and Vietnam to China
In recent years, PC makers have pursued a "China+1" strategy, maintaining their production base in China while also establishing manufacturing sites in other countries. The aim is to reduce dependence on a particular country or region and prepare for supply chain disruptions and policy changes. The reported shift of production from Thailand and Vietnam back to China can be seen as a partial review of this diversification strategy. However, the three companies are not scaling back production outside China across the board, and the number of units being moved, the models affected and the timing of completion have not been disclosed.
There are signs of a retreat from diversification across the industry as a whole. In a survey published on October 8, research firm TrendForce estimated that the share of global notebook PC production located outside China will fall from about 24% in 2025 to 21% in 2026. It also forecasts that the share could drop below 20% in 2027. These are estimates and forecasts for the notebook PC industry as a whole and do not indicate the scale of the production shifts by the three companies reported here.
Taiwanese contract manufacturers turn to AI servers, opening PC orders to Chinese firms
What stands out in the report is that, in addition to the countries of production, the lineup of companies doing the manufacturing is changing. For PC makers, producing at factories in China and outsourcing manufacturing to Chinese companies are separate decisions. In some cases they use the Chinese sites of existing contract manufacturers, and in others they switch orders to new companies, and the effects on procurement setups and manufacturing costs differ in each case.
According to Nikkei Asia, while Taiwanese contract manufacturers focus on their AI server businesses, opportunities to win PC manufacturing orders are widening for China's Luxshare, Huaqin Technology and Longcheer Technology. Growing demand for AI servers is not only pushing up prices of components such as DRAM; it is also influencing decisions by contract manufacturers about which businesses to devote their resources to. For PC makers, this could be an opportunity to secure new manufacturing partners alongside a review of production costs.
However, it has not been confirmed which Chinese companies HP, ASUS and Acer have each signed with, nor the specific contract terms or order volumes. It is also unclear how much lower Chinese companies' manufacturing costs are than those of Taiwanese contract manufacturers. It cannot be concluded that expanded production in China will directly lead to more orders for Chinese companies or large cuts in manufacturing costs.
To understand this move, it is necessary to separate the choice of production country, the change of manufacturing partner and the effect on selling prices. Based on the Nikkei Asia report and TrendForce's research, the changes confirmed at each stage and the points still unknown are summarized below.
| Decision | Change shown in reports and surveys | What is still unknown |
|---|---|---|
| Which country to produce in | Part of production in Thailand and Vietnam is being moved to China. At emerging production sites outside China, additional costs for logistics, component procurement and supply chain management are an issue | Number of units moved, models affected, specific cost savings. This does not mean a complete withdrawal of the diversification strategy |
| Which company to entrust with manufacturing | Taiwanese contract manufacturers are prioritizing AI servers, while opportunities for PC orders are widening for Chinese companies | Contract relationships by maker, order volumes, contract terms, cost competitiveness among contract manufacturers |
| What price to sell products at | The share of CPU, DRAM and SSD in the bill of materials has risen. Inventory bought cheaply in the past is for now cushioning the impact on prices and profits | How far manufacturing cost savings will be reflected in selling prices in each market, including Japan |
These decisions are related, but they do not necessarily move in the same direction. For example, manufacturing costs may change depending on the purchasing power of a new contract manufacturer, but the fact that production has moved to China alone does not reveal contract terms or the amount of savings. And if a maker uses the money it saves to absorb higher component prices, selling prices may not fall.
Why soaring component prices are prompting a return to China
Moving PC assembly back to China does not automatically bring down the globally soaring prices of semiconductors and memory. Even so, as component procurement costs rise, makers need to hold down other expenses such as manufacturing and logistics. In China, where production sites are heavily concentrated, it may be possible to keep down the costs of component procurement, logistics and supply chain management, and its economic advantages as a production location are drawing renewed attention.
In its October survey, TrendForce also pointed out that emerging production sites outside China incur additional costs for logistics, component procurement and supply chain management. The firm analyzed that if tariff pressure does not intensify further, some of the production capacity moved outside China could return to China. Makers appear to have entered a phase of reweighing the risk-reduction benefits of dispersing production against the cost advantages of using China's existing production base.
The need for cost cutting can also be seen in the changing bill-of-materials structure of PCs. In a September 4 survey, TrendForce estimated the share of key components in total bill-of-materials cost, using as a benchmark a mainstream notebook PC with a suggested retail price of $900 in the first quarter of 2025. According to the estimate, the combined share of the three components CPU, DRAM and SSD rose from about 45% in the first quarter of 2025 to 68% in the third quarter of 2026, an increase of 23 percentage points in just a year and a half.
However, the 68% figure is the three components' share of total bill-of-materials cost, not a ratio to the $900 selling price. Nor does the 23-percentage-point rise mean that the PC's overall bill-of-materials cost increased by 23%. Even so, it is clear that CPU, memory and storage account for a growing share of material costs, which helps explain why makers are trying to hold down other manufacturing-related expenses. That said, these figures alone cannot be used to calculate individual makers' profit margins or the savings from shifting production.
The component supply outlook will also shape future production strategies. TrendForce forecasts that as advanced-process production capacity is directed toward AI server products, tight DRAM supply could continue into 2027. For NAND Flash, it pointed out that supply could ease in the second half of 2027 as new production capacity comes online. Both are current forecasts and do not mean the memory market as a whole will improve at once.
Will PC prices fall, and what happens to investment in Southeast Asia?
Even if production cost savings are realized, the benefits will not necessarily flow directly into consumer selling prices. If the savings are used to cover soaring component procurement costs, maintaining selling prices may take priority. According to TrendForce, inventory of components bought cheaply before prices rose is playing a role in softening the impact on product prices and gross margins for the time being. But as that inventory shrinks, higher procurement costs are more likely to show up in prices and profits, so the impact is likely to differ by maker depending on purchase timing and inventory levels.
In the PC market, demand is also moving very differently by price range. According to a US market survey announced on September 9 by research firm Omdia, PC shipments in the second quarter of 2026 fell 6.5% year on year in the price range below $699, while rising 36.8% above $1,500. These are shipment results by price range for PCs excluding tablets and do not measure the effect of this production shift. Nor do they directly indicate selling prices or consumer purchasing appetite in the Japanese market, but they show that market trends differ greatly by price range.
Meanwhile, the return of production to China could also affect production sites in Southeast Asia, which have attracted investment as destinations for diversification. The Nikkei Asia report voices concern that investment in manufacturing equipment in Thailand will be hard to recoup if orders decline. Because investments in factories and equipment assume long-term production plans, changes in order volumes also affect contract manufacturers' profitability. However, production sites outside China retain a role in preparing for geopolitical risk, policy changes and supply disruptions, so their necessity cannot be judged by short-term manufacturing costs alone.
The report suggests that the PC industry's production strategy may be partially shifting from prioritizing supply chain diversification toward placing renewed emphasis on cost competitiveness. However, it is not yet clear how far production shifts to China will spread or how much the order structure of Taiwanese and Chinese contract manufacturers will change. Going forward, key factors to watch will be changes in production sites and manufacturing partners announced by each company, the models affected and trends in procurement costs, as well as how these are reflected in PC selling prices.