Why The Computer Parts Supply Chain Remains A Problem
Over the past few months, many of our clients have likely heard us inform them of the trouble it's been to get in equipment, particularly when the equipment is anything beyond a "standard" specification. Like many other industries, the electronics supply chains have been decimated from COVID for months and it has only gotten worse over the past few months. In this edition of Tech Talk News, we thought it might be a worthwhile exercise to explain why this is happening.
What happened to the usual supply?
Well, the root cause of all of this is the COVID-19 epidemic. Early on in 2020, China was hit hard and many of their factories had to be shut down for a time as workers quarantined. This caused a delay in getting many parts out to those that were purchasing it.
Over time, this effect could be seen throughout the world as the epidemic spread. The US got hit hard and dock workers quarantined at home, delaying shipments they would have normally gotten out by two weeks or more. Those onboard ships may have been unable to staff a full crew and set sail. Each stage of the process becomes another point for a delay as the virus spreads to that area and with how interconnected the world's trade routes have become, it doesn't matter much where the outbreak is, it is likely to result in some sort of delay.
And if you think about a computer as one part, that's one thing, but when you consider this is happening to every little part in the computer, it leaves a lot of potential for delays. It could be only one part that a computer is missing, but if it doesn't have that part, the computer won't work so a delay in a single part leads to significant delays and there are just so many different components in each device.
Further exasperating things are that the lack of some of these parts means that production facilities do not have the pieces they need to produce at max output and they have to wait for parts in order for them to get parts.
Those are among the issues with the supply aspect of the chain, but demand has become a major factor, as well.
What happened to the demand?
As we all know, many Americans spent a lot of time in quarantine or at least spending far more time in their homes than usual. This lead to many people taking the time to do upgrades to their homes, finding new things to do, or improving themselves in some manner.
Not even considering the amount of new computers and related items that companies needed to stock up on in order to allow users to work from home, many Americans took the opportunity to purchase a new phone or a new gaming console. Exercise bikes became a major thing that much of the population decided to purchase. Home renovations required new fridges or washers and driers. Unfortunately, all of these things and more require many of the same components, like computer chips, that are required for computers to be manufactured.
Additionally, with things like the first approved vaccine needing to be kept at extremely low temperatures, even more chips were needed to track their movement and temperatures to verify they were still usable.
All of these things severely increased the demand at a time when the supply was already dwindling. At that point it becomes basic economics: low supply and high demand result in many people not getting the supply they wanted and in the price of items increasing.
Experts are not sure how long it will take for the supply chain to be back under control, but they believe it will be several more months before there's some sense of normalcy returning to the global supply chain. It'd also help if natural disasters stopped affecting the areas where the few plants that make these parts are located.
