News Acer Warns of Laptop Oversupply as Inflation Concerns Grow

[Admin]

Leading PC OEMs and ODMs accumulated too much inventory which they cannot sell.

Acer Warns of Laptop Oversupply as Inflation Concerns Grow : Read more

 

[Quenepas]

Well, no one expected the war in Ukraine to unfold as it is happening. Just-in-time (JIT) and just-in-case (JIC) production methodologies are the two options executives make when navigating unfirseen circumtances as those we've seen in the past few years. Computer components are usually made in a JIT fashion but supply chain constrains drove manufactures to do JIC. Most famously Nvidia spend $10B in what most likely seems to be a JIC scenario and now there are rumors they are delaying to what it seems to keep Crypto-boom era pricing. So, a lot of inventory already scheduled to produce (chaning or canceling a calendar delivery with TSMC aint cheap, and if you cancel you might lose your position) while trying to keep above MSRP is a tall order and most likely plausible if there werent any other players competing. AMD can counter balance this no brainer play by Nvidia but Im sure they are well aware of the situation and it wouldnt be rare for them to make a coopetition move in which they'll be putting stuff out cheap but not by whole lot cheaper. Plenty people are waiting out this get and building a complete new rig with new CPU, CPU, DDR5, PSU but if AMD and Nvidia get too greedy they risk people just waiting out for a better price or getting last gen stuff.

 

[Spuwho]

The OEM's will do what they always do when inventory gets backed up.

To get it off the books they start to sell them to refurb companies at 60-70 cents on the dollar and cut the warranty for them by a third.

They write off the 30 cents for every dollar, while these "new" refurbished models hit the resell markets on eBay, Amazon, Rakuten, or other 3rd tier liquidators etc.

To keep the market from getting saturated, they break up these refurb offloads into tranches, and as the depreciated value of the laptops decline, they broker off more of them.

$1000 laptop is brokered off for $700 to a refurb marketer. They rebox it and sell it as refurb at $850 with only a 90 day warranty. OEM writes off the $300 per unit.

After 6-12 months the next tranche is prepped and the depreciated value of the laptop is now 20% less @ $800. The refurbisher buys them at $560, reboxes them, cuts the warranty to 90 days and sells them for $700. OEM takes in $200 in depreciation and 30 cents per unit in loss.

This continues until the inventory is consumed.

So the OEM doesn't have to bear the full weight of reducing the price and the long term warranty expense (which by discounting, they lose the revenue to support it).

They don't get in trouble with the FTC for selling stuff with false advertising. By changing them to used equipment they are allowed to cut the warranty.