The News
HP, Asus and Acer are moving some PC production from Thailand and Vietnam back to China to offset the AI-driven jump in memory and storage costs. The shift partly reverses the China+1 build-out PC brands made in Southeast Asia amid US-China trade tensions. Dell is weighing a similar move.
CPU, DRAM and SSD made up about 68% of the parts cost of a $900 mainstream notebook in the third quarter, up from 45% in early 2025. To keep the same gross margin, brands would need to raise the price of a comparable model by about 80%.
Notebook production outside China is shrinking, from about 24% of the world’s total in 2025 to 21% this year, and possibly below 20% in 2027.
The details
AI servers are taking memory that used to go to PCs. Its price keeps climbing.
Conventional DRAM contract prices are forecast to rise 10% to 15% in the fourth quarter from the third, and NAND flash 15% to 20%. PC DRAM supply could shrink in 2027 as more capacity shifts to servers.
Global PC shipments fell 20.1% from a year earlier in the third quarter, to 62.7 million units. HP’s fell 30.9%, the steepest drop among the top five.
Chinese contract makers are winning the work as Taiwan’s big assemblers chase server orders.
Quanta, Compal, Inventec and Foxconn are putting more of their capacity into higher-margin AI servers. Servers made up more than 80% of Quanta’s revenue in the second quarter.
Luxshare, Huaqin Technology and Longcheer Technology stand to pick up the PC orders. Some Chinese contract makers are waiving engineering and tooling fees to win them.
Quanta reportedly paused HP notebook production for about a week in September over rising component costs, then resumed after more talks.
Chinese memory is part of the pull. In February, HP and Dell were qualifying DRAM from China’s CXMT, while Acer and Asus asked their Chinese production partners to source memory for some notebooks.
HP planned to watch supply until about mid-2026 and, if DRAM stayed tight, would likely buy from CXMT for the first time, for non-US markets.
Contract makers in China have easier access to memory made by domestic chipmakers.
US-bound laptops took the opposite path over the past two years. HP told investors in August 2025 that “nearly all products sold in North America are now built outside of China.”
China supplied 94% of US laptop and tablet imports by value in 2018 and 18% in 2025. Through August this year it supplied 8%, while Vietnam supplied 69% and Thailand 10%.
China’s monthly share sat between 3% and 5% from July 2025 through March 2026, then climbed to between 10% and 12% from June through August.
The reports do not say which markets the China-built machines will serve.
My notes
The China+1 shift was mostly a US story. About 24% of the world’s notebooks were built outside China in 2025, while 82% of US laptop and tablet imports by value came from outside China that year. The Vietnam and Thailand lines were built largely around US demand, so I read the work moving back as mostly for other markets, though the reports do not say.
Is the summer uptick the start of it? China’s share of US laptop and tablet imports more than tripled between March and June. The Census code covers tablets too, so it could be iPads as easily as notebooks.
What’s next
The Census Bureau publishes September trade data by country on Nov 4, the next read on whether more US-bound laptops are coming from China. Global notebook shipments are forecast to fall again in 2027 by a low single-digit percentage. The drop could reach high single digits if brands pass higher DRAM and CPU prices on to buyers.
