HP, ASUS, and Acer Shift Notebook Production Back to China

Major notebook manufacturers HP, ASUS, and Acer are reducing their production capacity in Southeast Asia and shifting their focus back to China. This trend has emerged as companies increase orders to Chinese original design manufacturers (ODMs) and electronics manufacturing services (EMS) providers, particularly in regions like Chongqing and Kunshan. The move comes as these brands reassess their production strategies amid rising costs in Southeast Asia, where manufacturing is reportedly $9 more expensive per unit compared to China.

The decision to return to China for production is influenced by various factors, including the recent ruling by the U.S. Supreme Court that deemed equivalent tariffs unconstitutional, which has lessened the impact of substitute tariffs. Additionally, local Chinese governments are urging manufacturers to ramp up production due to declining tax revenues, further incentivizing the shift back to China. In contrast, companies like Lenovo, Dell, and Apple have maintained their production strategies, with Lenovo being particularly cautious due to its diversified operations.

The gross profit margins for notebook manufacturers typically range from 3% to 10%, and the increased production costs in Southeast Asia have led to concerns about unprofitable shipments. As a result, some ODMs are prepared to adjust their production lines to accommodate customer needs, potentially shifting focus to other products like servers and networking equipment.

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Source: KLEA News