Although Asus has been proactively preparing for potential geopolitical tariff changes, it warned that it may have to increase its prices later this year as it sets up new production facilities outside China.
"We will try to limit these costs to within a reasonable level. However, as we make further adjustments to production lines, it may become possible that we need to offset some of these costs to our clients," an Asus co-CEO said at the company's earnings conference call with investors and financial analysts.
The Asus executive continued, "And right now, we are seeing that some brands are already starting to make adjustments to their retail prices to cover their costs. But for Asus, we will do our best to limit the impact of these changes for our customers, we will try to maintain our offer as the most competitive in terms of both service quality and pricing."
Production Shift Away From China To Avoid U.S. Tariffs
To avoid tariffs expected to be imposed by the new U.S. government, makers of PCs and computer components are shifting production away from China. Large PC makers, such as Dell and HP, have been turning their production to other countries for years now and have resilient supply chains that can at least lower the impact of tariffs. Other PC makers are turning their capacities now. However, shifting takes time, so some tariffs must be paid. Furthermore, setting up new production capacity costs money, impacting companies' profit margins or prices for the end-user.
Asus primarily plans to minimize customer impact by proactively managing tariff effects. Specifically, Asus intends to absorb impacts internally by adjusting production and inventory management strategies (e.g., shifting manufacturing locations globally).
Maintaining pricing competitiveness is a priority, indicating that potential price increases would be carefully considered and kept minimal. However, Asus acknowledged that if tariff costs become significantly high or persist, they may partially pass some costs to customers, but only to the extent necessary.
"We are seeing that some brands are already starting to make adjustments to their retail prices to cover their costs," the co-CEO said. "But for Asus, we will do our best to limit the impact of these changes for our customers, we will try to maintain our offer as the most competitive in terms of both service quality and pricing."
In short, Asus will prioritize maintaining competitive pricing, potentially accepting some margin pressure in the short term. Still, it does not rule out limited price adjustments if tariff impacts become significant.
