for today's video i won't be directly commenting on the recent health related
news because a i'm not a medical professional and b i don't need my video
demonetized instead i'm going to be laser focused on you the potential
electronic shopper world events affecting manufacturing capacity and
logistics occur every day and that's why
your local computer store has a buffer of inventory rather than just keeping
one of every motherboard on the shelf nobody likes carrying inventory because
it ties up cash flow but it's a necessary part of doing business when
your supplier isn't right down the street now so far these buffers which
exist at every stage of the chain be it raw materials components and finished
goods have mostly absorbed the production capacity that's been lost
mostly in china over the last few weeks but
the cracks are starting to show so here's my argument if you're planning an
upgrade i would pull the trigger today rather than do it tomorrow
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tech tips
part of what's made this year's production interruption so impactful is
the terrible timing the chinese new year festival is already a period of low
productivity in china because most factories shut down for about two weeks
while their workers travel home to enjoy some time off with their friends and families now experienced product
managers will plan around this building up some extra inventory to compensate
for it but even for experienced people
two weeks is a long time and human error or other small roadblocks can already
lead to fewer promotions around this time of year while retailers can serve
stock until the factories can kick back up and start shipping product again
except that this year they didn't kick back up and start shipping product
february 8th was supposed to be the end of the festival but instead it marked
the 16th day of the wuhan quarantine and
hong kong's forced quarantine policy for travelers from china now i'm recording
this video on february 25th and according to my conversations with
industry sources who preferred to stay off the record as of last week
production capacity at major manufacturers so we're talking like the
foxconns and compounds of the world had finally ramped up to about 15
with this week expected to be closer to 30 or 40
which sounds like pretty good news but i
still stand behind the title of this video apple has already issued an update
a week ago citing global supply constraints as part of the reason that
they were not expecting to hit their second quarter revenue forecast and from
an unrelated conversation with a major SSD manufacturer i learned that all of
their ssds are currently on allocation allocation means that customers are
welcome to place orders for however many units they want but current supply is
not enough to fulfill them all and the company is working to strategically
distribute what they have here's the thing the major players are beginning to
return to work but there are a lot of other moving parts in the machine that
puts a shiny new iphone on your doorstep every year right now the big factories
don't have a supply issue because much like a retailer they buffer the supplies
that they need in order to produce products but those familiar with the
concept of just-in-time delivery will know that they try to keep as little on
hand as possible under normal conditions so the subcontractor factories who turn
raw materials like copper into finished printed circuit boards for those major
manufacturers well so far they haven't been able to
ramp back up as fast and they might not be able to apply the same amount of
pressure on regulators to get back up to full capacity so we can make an educated
guess that if someone like pegatron doesn't have enough pcbs their customers
aren't going to be receiving enough completed graphics cards anytime soon
the other issue is logistics chinese officials are apparently smoothing out
the process of clearing drivers and dock workers to return to work and it is
getting better but a lot of the transportation workers still haven't
returned to work or they're in precincts where they're not allowed to travel to
other regions now to protect my source i won't say what kind of product i'm
talking about but i did hear an anecdote about a couple thousand finished units
of a large device sitting there ready to ship out with
just two drivers to move them out so we
could be in a position where even if people are at the factory working and
building things there could be no way for us to get them
and while i've been focused mostly on china so far this is not just a chinese
problem even with all the outsourcing last year due to tariff concerns a lot
of what was outsourced was sub-assembly or final assembly to mexico india
vietnam or what have you but the thing is all the sub-components still need to
come out of china for assembly so
it's going to hit everyone even if it's indirectly where we really run into
trouble is if it starts to affect others directly as well
samsung just closed one of their phone factories in korea last weekend due to a
confirmed infection of one of the workers there anantech has the most recent hard
numbers i could find and as of the midpoint of last year south korea
including samsung who holds the lion's share of the market was still producing
about 70 of the world's dram so that's
the memory for your pc phone and game
console and about half of the world's 3d
nand so those are the storage chips and your ssds your phones and yes
game consoles now nothing has happened on the game console front yet but
because of that last point ssds in particular could be in a very vulnerable
position nand was already expected to jump this year after enjoying a period
of never before seen affordability and there are multiple factors that
speculators could have expected to contribute to this client devices have
almost entirely abandoned mechanical drives except on the very low end data
centers are using more ssds than ever before to improve performance in highly
virtualized deployments or i o intensive workloads and both sony and microsoft
are going to be shipping their next generation game consoles in holiday 2020
with ssds rather than hard drives for the first time by the way total aside
console gamers welcome to 2010. it's awesome you're gonna like it back on
topic though the best case scenario for all of this is that the candidate
vaccine that's scheduled to begin human trials at the end of april will be fast
and cheap to manufacture and 100 safe and effective
or even that it won't be necessary because hotter weather will stop the
spread and maybe in a few years time we'll be looking back at this as a
disproportionate amount of media coverage over a particularly nasty
strain of the flu but if it does not play out like that there's no clear end
in sight this example of inventory hoarding and price increases is actually
not from the tech industry but rather from speaking with a buddy of mine who runs a local gym
pricing for bulk purchases of badminton shuttles or birdies of all things is
skyrocketing right now and that assumes that you can even find any to buy even
ltteststore.com has been affected by the way um many of our china source items
are out of stock now back when the thailand floods knocked out an estimated
30 percent of the hard drive industry's manufacturing capacity in 2011 i
actually still remember the same kind of hoarding behavior that i saw from my
buddy at the badminton facility who's just buying every shuttle he can find i
remember getting this memo from the president of the company telling
everyone to go and buy like literally go get in their cars and buy as many cheap
external hard drives which sometimes trail the bear drives in terms of
pricing fluctuations as we were allowed to from local big box stores so that we
could strip the enclosures off of them and then sell them in our systems or to
bear drive customers if it stretches on for too long guys
even the used market will be affected when the pricing of brand new hard
drives went up 50 from the manufacturer
retailers added an additional markup because they couldn't get enough supply
and the thing is the pricing of used hardware tends to follow the trend set
by new hardware minus some expected
discount for the uncertainty of not having a warranty so in summary if
you're waiting for some new or upcoming product like Intel's 10th gen desktop
chips or NVIDIA's upcoming 3000 series gpus there is nothing that you can do
for now other than hope that they don't get delayed too much but if you were
holding off on pulling the trigger on something that's already available today
i would do it today rather than tomorrow i'm not here to debate the measures that
are being put in place or the validity of the ongoing health concerns i'm just
here to point at the events that arise from these concerns and how they could
affect tech enthusiasts if you're looking for a recommendation for a good
system by the way you can check out one of our recent build guides the 900 rise
in gaming build and our Intel core i7 first person view gaming build are both
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enjoyed this video it's a little different from our usual style but uh
hey leave a comment let me know what you think all right