News Reports: Coronavirus Sending Rippling Damage Throughout Tech Industry

[Admin]

RAM supply chains, as well as Acer and Asus' revenue are reportedly in jeopardy due to coronavirus.

Reports: Coronavirus Sending Rippling Damage Throughout Tech Industry : Read more

 

[digitalgriffin]

So Asus is complaining about supply being down and demand being down? Technically speaking these should offset one another in terms of consumer pricing. It still hurts Asus's bottom line however as revenue will drop.

 

[bit_user]

So Asus is complaining about supply being down and demand being down? Technically speaking these should offset one another in terms of consumer pricing.

The problem with this is likely to be that they'll not be able to source a few critical components, which would drop their output of certain products to zero. Since demand would not go to zero, we could see some fairly wild price instability.

You might think that demand could simply shift to comparable products from another manufacturer, however if there are certain suppliers that are systemically important to the industry and cannot fulfill orders, then there might be nowhere else for demand to shift.

Another consideration is that demand from outside China is not likely to drop by much. That's another reason I expect to see price spikes and out-of-stock notices on certain classes of products.

 

[froggx]

So Asus is complaining about supply being down and demand being down? Technically speaking these should offset one another in terms of consumer pricing. It still hurts Asus's bottom line however as revenue will drop.

Assuming the price remains the same (which, imo, is fair enough, since supply and demand analysis is already a simplified model and we aren't throwing around numbers) the price will actually end up rising. Selling fewer units at the same price increases the cost per unit for Asus so the supply curve will shift even further and ends up intersecting the demand curve at a higher price. Then there's the effect of the increased marginal cost from the increased price of precursor components and other fun stuff making the situation for Asus even worse, but things start to get more complicated than I care to dig into when I can just say, "coronavirus kinda sucks hardcore."

 

[froggx]

The problem with this is likely to be that they'll not be able to source a few critical components, which would drop their output of certain products to zero. Since demand would not go to zero, we could see some fairly wild price instability.

You might think that demand could simply shift to comparable products from another manufacturer, however if there are certain suppliers that are systemically important to the industry and cannot fulfill orders, then there might be nowhere else for demand to shift.

Another consideration is that demand from outside China is not likely to drop by much. That's another reason I expect to see price spikes and out-of-stock notices on certain classes of products.

I could be super wrong here, but it seemed that electronic component manufacturers have been trying to move out of China due to the trade war with the U.S. and companies outside China (e.g. Samsung) were gaining market share. If there is a certain IC only made in China it could be a problem, but more basic components like capacitors and resistors are made in multiple countries. Unless I'm behind on news, China is pretty much the only place shutting down. Also there's always that one guy that shouts "it's for the good of the colony!" and (in a manner leading to the automation randomly groaning and sparking while bordering on a cyberpunk paradise) runs the whole factory, albeit slowly with questionable QA. Also it seems like a good time to pull out the surplus every company seems to have lying around in mislabeled crates at the back of a decrepit warehouse built during the Cold War.

 

[bit_user]

I could be super wrong here, but ...

Yeah, I'm not speaking from actual knowledge of the industry. Just hypotheticals.

It seems we're still in agreement that random supply shortages and price spikes seem likely.

 

[justin.m.beauvais]

It seems like there is a lesson about diversification in here somewhere. Quantity of eggs in number of baskets and such. They should probably look into spreading out manufacturing once the illness has been taken care of, if any of us survive. The way the media is cracking on about this makes our survival seem questionable.