Memory inflation from AI is reversing part of the China-plus-one shift in PCs, handing mid-range orders and component sourcing to Chinese assemblers such as Luxshare and Huaqin.
Several of the world’s largest PC brands, including HP of the United States and Asus and Acer of Taiwan, are moving part of their production from Thailand and Vietnam back to China, Nikkei Asia reported on October 28. The companies are also turning to a newer group of Chinese contract manufacturers as soaring prices for memory, storage and other parts squeeze their margins.
The report rests on unnamed supplier executives and supply-chain managers. Acer told Nikkei it adjusts supply-chain operations dynamically to stay resilient and competitive, while HP, Dell and Asus did not respond, according to IT Home, which carried the most detailed Chinese account. No source has named the product lines, volumes or plants involved.
The shift cuts against a multi-year effort to move PC assembly out of China. It is driven by cost rather than policy: demand for AI servers has absorbed memory supply and the capacity of the largest contract manufacturers, and China offers the deepest pool of alternatives.
AI servers are pulling both chips and factories away from PCs
The cost pressure is concentrated in a few components. CPU, DRAM and SSD made up about 68% of a mainstream notebook’s bill of materials in the third quarter of 2026, up from 45% in early 2025, TrendForce estimated. Research firm Omdia, cited by IT Home, put the bill of materials for a mainstream PC selling at US$500 to US$699 at US$699 in the third quarter of 2026, up from US$435 in the first quarter of 2025; for entry-level machines under US$500 it rose from US$275 to US$471. Circuit boards and passive components have also climbed.
At the same time, Taiwan’s largest original design manufacturers, Quanta, Compal, Inventec and Foxconn, are steering capacity toward AI servers, which carry higher margins. Servers made up more than 80% of Quanta’s second-quarter revenue, according to TrendForce, which also cited a Taiwan report that Quanta paused HP notebook production for about a week in September over a cost dispute.
A chip-supplier executive whose customers include major PC brands told Taiwan’s Economic Daily News that the move is driven by cost pressure. Counterpoint analyst Lin Keyu told the paper that China benefits from a components ecosystem that is hard to replicate elsewhere.
Chinese assemblers are gaining orders and purchasing power
The beneficiaries are Chinese manufacturers that have mostly built phones, wearables and servers. Luxshare, Huaqin and Longcheer are taking more PC orders, according to Nikkei and TrendForce. Three people familiar with the matter told Nikkei that LuxPC Union, a joint venture of Luxshare and Shanghai Liulian Intelligent Technology, won orders from HP, Dell and Asus over the past year. Smaller assemblers such as Great Wall Computer are also gaining work, though sources differ on the other names.
The brands are handing these partners more of the purchasing as well. Acer has passed more component sourcing, including processors and memory, to Chinese manufacturers, and an executive said HP, Dell, Lenovo and Asus have done the same for mid-range and entry-level projects. Chinese contract makers are marketing easier access to memory made by Chinese suppliers such as CXMT, Tom’s Hardware reported, and two new production lines in Thailand built for PC clients have not yet turned a profit, a component supplier manager said.
Tariffs have also faded as a reason to stay away. Laptops and desktops won an exemption from high US tariffs last year, IT Home noted, and a gaming-PC executive said the US tariff issue had been shelved, prompting his company to consider China manufacturing again.
Southeast Asia stays in place as the backup base
The reversal is partial. HP had planned in 2023 to move several million laptops’ worth of capacity to Thailand and Mexico, and later aimed to shift up to 70% of production out of China, according to IT Home. Supply-chain executives told Economic Daily News that Southeast Asia will remain the "China plus one" base, because they expect no improvement in US-China relations. TrendForce estimates that the share of notebooks made outside China fell from about 24% in 2025 to a forecast 21% in 2026 and could drop below 20% in 2027.
The market backdrop is weak. Omdia expects global PC shipments to fall 24% in the fourth quarter after a 21% drop in the third, according to IT Home. Dell is reportedly evaluating a similar move. The clearest next signal would be confirmation from HP, whose shift to Southeast Asia was the industry’s reference point, or Chinese contract makers reporting PC revenue growth in their fourth-quarter results.