WEBVTT

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for today's video i won't be directly commenting on the recent health related

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news because a i'm not a medical professional and b i don't need my video

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demonetized instead i'm going to be laser focused on you the potential

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electronic shopper world events affecting manufacturing capacity and

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logistics occur every day and that's why

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your local computer store has a buffer of inventory rather than just keeping

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one of every motherboard on the shelf nobody likes carrying inventory because

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it ties up cash flow but it's a necessary part of doing business when

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your supplier isn't right down the street now so far these buffers which

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exist at every stage of the chain be it raw materials components and finished

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goods have mostly absorbed the production capacity that's been lost

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mostly in china over the last few weeks but

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the cracks are starting to show so here's my argument if you're planning an

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upgrade i would pull the trigger today rather than do it tomorrow

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tech tips

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part of what's made this year's production interruption so impactful is

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the terrible timing the chinese new year festival is already a period of low

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productivity in china because most factories shut down for about two weeks

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while their workers travel home to enjoy some time off with their friends and families now experienced product

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managers will plan around this building up some extra inventory to compensate

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for it but even for experienced people

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two weeks is a long time and human error or other small roadblocks can already

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lead to fewer promotions around this time of year while retailers can serve

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stock until the factories can kick back up and start shipping product again

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except that this year they didn't kick back up and start shipping product

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february 8th was supposed to be the end of the festival but instead it marked

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the 16th day of the wuhan quarantine and

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hong kong's forced quarantine policy for travelers from china now i'm recording

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this video on february 25th and according to my conversations with

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industry sources who preferred to stay off the record as of last week

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production capacity at major manufacturers so we're talking like the

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foxconns and compounds of the world had finally ramped up to about 15

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with this week expected to be closer to 30 or 40

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which sounds like pretty good news but i

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still stand behind the title of this video apple has already issued an update

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a week ago citing global supply constraints as part of the reason that

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they were not expecting to hit their second quarter revenue forecast and from

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an unrelated conversation with a major SSD manufacturer i learned that all of

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their ssds are currently on allocation allocation means that customers are

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welcome to place orders for however many units they want but current supply is

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not enough to fulfill them all and the company is working to strategically

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distribute what they have here's the thing the major players are beginning to

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return to work but there are a lot of other moving parts in the machine that

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puts a shiny new iphone on your doorstep every year right now the big factories

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don't have a supply issue because much like a retailer they buffer the supplies

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that they need in order to produce products but those familiar with the

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concept of just-in-time delivery will know that they try to keep as little on

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hand as possible under normal conditions so the subcontractor factories who turn

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raw materials like copper into finished printed circuit boards for those major

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manufacturers well so far they haven't been able to

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ramp back up as fast and they might not be able to apply the same amount of

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pressure on regulators to get back up to full capacity so we can make an educated

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guess that if someone like pegatron doesn't have enough pcbs their customers

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aren't going to be receiving enough completed graphics cards anytime soon

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the other issue is logistics chinese officials are apparently smoothing out

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the process of clearing drivers and dock workers to return to work and it is

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getting better but a lot of the transportation workers still haven't

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returned to work or they're in precincts where they're not allowed to travel to

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other regions now to protect my source i won't say what kind of product i'm

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talking about but i did hear an anecdote about a couple thousand finished units

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of a large device sitting there ready to ship out with

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just two drivers to move them out so we

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could be in a position where even if people are at the factory working and

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building things there could be no way for us to get them

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and while i've been focused mostly on china so far this is not just a chinese

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problem even with all the outsourcing last year due to tariff concerns a lot

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of what was outsourced was sub-assembly or final assembly to mexico india

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vietnam or what have you but the thing is all the sub-components still need to

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come out of china for assembly so

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it's going to hit everyone even if it's indirectly where we really run into

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trouble is if it starts to affect others directly as well

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samsung just closed one of their phone factories in korea last weekend due to a

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confirmed infection of one of the workers there anantech has the most recent hard

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numbers i could find and as of the midpoint of last year south korea

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including samsung who holds the lion's share of the market was still producing

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about 70 of the world's dram so that's

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the memory for your pc phone and game

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console and about half of the world's 3d

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nand so those are the storage chips and your ssds your phones and yes

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game consoles now nothing has happened on the game console front yet but

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because of that last point ssds in particular could be in a very vulnerable

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position nand was already expected to jump this year after enjoying a period

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of never before seen affordability and there are multiple factors that

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speculators could have expected to contribute to this client devices have

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almost entirely abandoned mechanical drives except on the very low end data

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centers are using more ssds than ever before to improve performance in highly

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virtualized deployments or i o intensive workloads and both sony and microsoft

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are going to be shipping their next generation game consoles in holiday 2020

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with ssds rather than hard drives for the first time by the way total aside

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console gamers welcome to 2010. it's awesome you're gonna like it back on

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topic though the best case scenario for all of this is that the candidate

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vaccine that's scheduled to begin human trials at the end of april will be fast

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and cheap to manufacture and 100 safe and effective

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or even that it won't be necessary because hotter weather will stop the

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spread and maybe in a few years time we'll be looking back at this as a

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disproportionate amount of media coverage over a particularly nasty

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strain of the flu but if it does not play out like that there's no clear end

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in sight this example of inventory hoarding and price increases is actually

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not from the tech industry but rather from speaking with a buddy of mine who runs a local gym

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pricing for bulk purchases of badminton shuttles or birdies of all things is

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skyrocketing right now and that assumes that you can even find any to buy even

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ltteststore.com has been affected by the way um many of our china source items

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are out of stock now back when the thailand floods knocked out an estimated

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30 percent of the hard drive industry's manufacturing capacity in 2011 i

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actually still remember the same kind of hoarding behavior that i saw from my

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buddy at the badminton facility who's just buying every shuttle he can find i

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remember getting this memo from the president of the company telling

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everyone to go and buy like literally go get in their cars and buy as many cheap

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external hard drives which sometimes trail the bear drives in terms of

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pricing fluctuations as we were allowed to from local big box stores so that we

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could strip the enclosures off of them and then sell them in our systems or to

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bear drive customers if it stretches on for too long guys

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even the used market will be affected when the pricing of brand new hard

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drives went up 50 from the manufacturer

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retailers added an additional markup because they couldn't get enough supply

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and the thing is the pricing of used hardware tends to follow the trend set

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by new hardware minus some expected

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discount for the uncertainty of not having a warranty so in summary if

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you're waiting for some new or upcoming product like Intel's 10th gen desktop

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chips or NVIDIA's upcoming 3000 series gpus there is nothing that you can do

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for now other than hope that they don't get delayed too much but if you were

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holding off on pulling the trigger on something that's already available today

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i would do it today rather than tomorrow i'm not here to debate the measures that

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are being put in place or the validity of the ongoing health concerns i'm just

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here to point at the events that arise from these concerns and how they could

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affect tech enthusiasts if you're looking for a recommendation for a good

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system by the way you can check out one of our recent build guides the 900 rise

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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

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hey leave a comment let me know what you think all right