Buy that PC - Now

If you are in need of a new computer but have been dragging your feet, there are mounting reasons to expect price increases and shipping delays in the weeks ahead.  I have been talking almost daily with a large PC manufacturer in Taiwan and he has given me some inside information that I have not seen reported so far in the US – two facts that will limit your access to inexpensive equipment starting almost immediately.

Labor Shortage in China

As conditions in China improve, it gets harder to find workers.

Most of the electronics manufacturing takes place along the coast because that is where the products are loaded onto ships and sent around the world.  Much of China’s coastal work force actually lives in the middle of the country but travels east for work, sending money all year back to their families.  The entire country shuts down for Chinese New Year and workers take this opportunity each year to visit their families.  When the week-long celebration ends most return to their (relatively) high paying job.

Every year about 25% of the workers decide, for whatever reason, to stay with their families.  Companies have become used to starting the new year with only about 75% of the staff and replacing the missing employees along the way.

But this year the improving Chinese economy meant that more workers were able to find relatively good jobs closer to home, and when the plants started up they were distressed to find that only about half of the workers had returned.  This was unexpected and was the first blow to a smooth supply of new equipment.

Parts from Japan

Japan accounts for about 20% of the world’s semiconductor production, but almost 50% of the supply of computer memory.  While few of the fabrication plants were directly affected, the massive disasters in the rest of the country are having a huge impact in many ways – energy, fuel, transportation, workers, raw materials.

My contact in Taiwan told me that he usually receives quotes on memory from Japan every week.  The electronics market is very volatile and prices change rapidly even under the best conditions.  Once the quake hit he began needing quotes every day.  During the first days after the disaster prices were increasing by around 4% every day.  And now Japan has quit providing quotes at all.

These same facts are known by high-tech manufacturers all over the world who are now scrambling to scoop up as much inventory as they can.  Companies just like his can no longer count on a reliable supply of components and completed circuit boards and really have no idea what lies ahead.  Even a two week disruption can have an impact for months ahead, and what we are seeing today will certainly affect supply chains for the rest of the year.

That $417 PC from Dell?  That latest iPad?  Might be a good time to go ahead and make the purchase.