AI is pushing up the cost of memory and other major PC manufacturers, it is reported that HP and other major PC manufacturers will transfer some production back to China

Abstract:

On October 28, Nikkei Asia reported that major PC manufacturers such as HP, Asus and Acer are responding to soaring component costs by moving some production back to China from Thailand and Vietnam and using a new generation of OEM manufacturers.

HP and other companies are moving production back to China

Many people familiar with the matter told Nikkei Asia that these PC manufacturers are seeking higher manufacturing efficiency as bill of materials costs rise and AI demand leads to severe shortages of memory and storage components. China is still the best choice for PC manufacturers to manufacture computers because it has an experienced labor force, lower prices and a complete supply chain ecosystem that can provide comprehensive parts supply channels.

At the same time, these PC makers are switching to lesser-known Chinese foundries as larger foundries become increasingly busy producing higher-margin AI data center server orders. Dell, the world's third-largest PC maker after Lenovo and Hewlett-Packard, is also evaluating similar adjustments, people familiar with the matter said.

“This move is indeed driven by cost pressures,” said a chip industry executive whose company supplies all major PC manufacturers. “The prices of not only memory chips but other components have also increased so rapidly that it is increasingly difficult for PC manufacturers to absorb these increases. They are moving some production back to China and working with more Chinese contract manufacturers, mainly because the latter can provide very competitive prices.”

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

An Acer spokesperson said: "We will dynamically adjust our supply chain operations to enhance the resilience of the supply chain and remain competitive. We have been working with multiple manufacturers and suppliers to maintain a flexible adjustment strategy, which has been the case for many years."

As of press time, HP, Dell and Asus have not commented.