AI Drives Up Memory Costs, HP and Other Major PC Makers Shift Some Production Back to China

HP and other companies are moving production back to China

Several people familiar with the matter told Nikkei Asia that, as bill-of-materials costs rise and AI demand causes severe shortages of memory and storage components, these PC makers are seeking greater manufacturing efficiency. China remains the best choice for PC makers to manufacture computers, because it has an experienced workforce, lower prices, and a complete supply chain ecosystem capable of providing comprehensive component supply channels.

At the same time, these PC makers are shifting to lesser-known Chinese contract manufacturers, because the larger contract manufacturers are increasingly busy producing higher-margin AI data center server orders. The people familiar with the matter said Dell, the world's third-largest personal computer maker after Lenovo and HP, is also evaluating similar adjustments.

"This move is indeed driven by cost pressure," said a chip industry executive whose company supplies all major PC makers. "Not only memory chips, but prices of other components are also rising so rapidly that it is increasingly difficult for PC makers to absorb these increases. They are moving part of their production back to China and working with more Chinese contract manufacturers, mainly because the latter can offer highly competitive prices."

The executive said that if the cost environment does not improve, PC makers may move more production back to China.

An Acer spokesperson said: "We dynamically adjust our supply chain operations to enhance supply chain resilience and remain competitive. We have always worked with multiple manufacturers and suppliers, maintaining a flexible adjustment strategy, and have done so for many years."

As of press time, HP, Dell and Asus had not commented on the matter.