Computer Scarcity Hits Tech Companies Due to Coronavirus

Companies in California’s Bay Area and beyond are scrambling to find certain computer hardware due to factory shutdowns. Safety precautions from the coronavirus have placed an indefinite pause on hardware manufacturers.

by Chase DiFeliciantonio, San Francisco Chronicle / March 6, 2020
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(TNS) — Moving offices is hard enough. For some companies, the coronavirus situation is making it worse.

That’s because certain types of computer hardware — key parts of a modern company’s infrastructure — are becoming scarce, following factory shutdowns in Asia.

That is the issue facing San Francisco pay-per-mile car insurance startup Metromile, which is relocating its headquarters from South of Market to Market Street.

Inside the server room at the company’s new office, many Ethernet ports sit empty for want of cables. Such hard-wired connections are still preferred for data-heavy work like videoconferencing. Some of the work now has to be done over Wi-Fi instead, according to Debra Jack, the company’s vice president of communications.

Because devices like computers are complex machines with components made and assembled across the world, factory closures and delays of key parts can hold up a supply chain, according to Metromile chief technical officer Paw Andersen.

Those parts include the memory chips known as RAM and solid-state drives that are used in Apple’s MacBook Air and other products.

Craig Yeung, general manager of the six-store Central Computers chain of Santa Clara, said he has noticed that those parts are in short supply.

“There was already going to be a price increase on SSDs and RAM,” Yeung said, adding the factory closures in China and elsewhere caused by coronavirus had “piled on to that.” He estimated that prices for those items, because of shortages, had risen about 10% and were likely to go up another 10% soon.

The concerns extend beyond the Bay Area.

“We are stocking up on PCs, especially for our Tempe (Ariz.) office, where our customer-facing teams are based,” Andersen of Metromile wrote in an email. “For the time being, we are also repurposing laptops.” He said Apple supplies were still reliable.

Yeung said Central Computers is dealing with longer wait times for Apple computers, with an order of customized MacBooks scheduled to arrive in one week now likely to arrive in two.

“I don’t know if it’s going to come in two weeks,” Yeung said, adding the issue could be a fluke not related to the virus and that he hadn’t yet seen companies stocking up.

Apple did not respond to a request for comment for this story. The company previously cut its revenue expectations for the March quarter amid factory closures because of the virus. Apple has since said factories are coming back online.

Companies may not be seeing constrained MacBook supplies since Apple keeps inventory on hand in the U.S. specifically to fill orders and meet spikes in demand, according to Neil Cybart, founder of Above Avalon, a website that analyzes Apple.

“My expectation is that (levels of this inventory) across the board are pretty low, Cybart said. “If disruptions lasted a couple more weeks, we would probably see more in the way of supply issues.”

Not all companies feel impacted by rumblings in the supply chain. San Francisco software company Okta uses both Macs and PCs and said it hasn’t had supply issues so far.

“Of course, an extended factory shutdown would impact all companies that provide employee computers, but we’ve prepared for slowdowns and preorder our technology to prevent short-term demand cycle issues,” Christopher Flynn, the company’s vice president of employee enablement, wrote in an email.

M.A.C. Berkeley, a computer and accessories store, is hearing from suppliers that newer products like cables, accessories, adapters and cases may be in short supply soon, according to Wai Lee, who owns the store along with his family.

“We haven’t seen anything immediate,” Lee said. “It makes sense that it’ll happen, but it hasn’t truly hit yet.”

On the PC side, shipments from China are likely to drop 10% to 20% according to an email from Hitendra Chaturvedi, a professor of supply chain management at the Arizona State University W.P. Carey School of Business.

“This is a significant drop but not so significant that it would create a rush to hoard,” Chaturvedi said. “Yes, we are seeing some shortage of supplies across the country,” he said, but the computer supplies market should ultimately be able to handle the crisis.

Chaturvedi said hoarding of computers and supplies could cause companies to end up with large amounts of cash locked into computer inventory.

“My recommendation will be to increase essential item inventory by 50% for one month and not more,” he added. “That should see the companies through this crisis.”

©2020 the San Francisco Chronicle, Distributed by Tribune Content Agency, LLC.

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