Some component makers in the ODM notebook supply chains have apparently slowed down their moves for relocation of their production bases to Chongqing or Chengdu in western China on concerns of profitability, according to industry sources.

For notebook ODMs, the relocation of production lines to western China will mean an increase of US$4-5 in unit cost or a loss of 1pp in gross margin, which is closing to a level of only 3-4% on average, indicated the sources.

The local governments in Chongqing and Chengu both have previously promised to compensate the added costs to notebook ODMs for shifting their production bases to the two cities. However, most notebook ODMs have not yet received any compensations from the local governments, the sources revealed.

Notebook ODMs including Quanta Computer, Compal Electronics, Wistron and Inventec, which have migrated part of their production facilities to western China under the request of their clients, have also tried in vain to raise their ODM prices.

Despite rising production costs, most notebook ODMs said that their current policies of migrating some of their production to western China remain unchanged for decentralization of production risk.