May 18, 2021

Supply and pricing challenges for IT equipment: order in time

As you have probably already heard, delays to delivery times are hampering the international markets, and at Bechtle we have noted that both delivery times and prices of IT equipment are increasing. We advise our customers to contact us in good time so that we can take preventive action. This is our way of trying to deliver the products (and/or additional services) on time.

What is causing this? There are two main reasons for the delay and the increase in current prices.
 

  1. 1. Increased demand, limited raw materials

The first reason is the increased demand for computers, laptops and other IT equipment. Especially with regard to semiconductors, the building blocks of computer chips, there is a huge influx of requests. The pandemic has increased the demand for high-tech innovation.

But what is the exact cause of the shortage? Many factories in Asia and Europe closed their doors in the spring of 2020 due to the lockdown. As a result, the production of semiconductors and IT equipment stagnated. This situation was far from ideal, as the demand for IT hardware skyrocketed around the world.

When the first wave of the pandemic ended, production of IT equipment resumed. In addition to the fact that there is a backlog to clear, the significant and increasing global market demand is an additional challenge. This is no easy task, because factories cannot ‘simply’ run at double capacity. And even if they could, they would have to deal with the shortage of raw materials. Because, in addition to the IT industry, countless other sectors are handling overfull order lists.

Bild6
  1. 2. Transport delays

In addition to delivery times from manufacturers, the delivery of IT equipment is further delayed because the entire transport sector is struggling with shortages where logistical processes are concerned. The vast majority of IT parts are shipped from Asia to Europe by sea container. Both sea containers and container ships are also experiencing exponentially increased demand, resulting in scarcity.

The consequence here is also twofold: on the one hand, it now takes longer for goods to be shipped, and on the other hand, transport prices are being pushed up. After all, prices rise when supply is limited. This means that shipping a container from Asia to Europe is up to five times more expensive than before.

Bild7
  1. When will the problems be solved?

The pandemic accelerated the digitisation of the economy, and this trend is here to stay for some time. As a result, the increased demand for semiconductors does not seem to be a passing development. Instead, the current chip shortage should be seen as a precursor of the increasing importance of high-tech innovation in the global economy. 

We believe that, at a steady pace, we will return to a time when we can walk into a meeting room without a face mask. A time when production plants can run at full speed to meet demand. A number of manufacturers have already announced that they are opening additional factories, even outside Asia.

 

We are already opening discussions with organisations that are preparing meeting rooms and workplaces for the return of office workers. If your organisation is already thinking about facilitating the new way of working, then submit your IT request in good time. Our consultants are ready to give you professional and optimised advice in good time, taking into account market trends and the challenges described above.


Bronnen CNN Business, Hanna Ziady, 4 May 2021, The global chip shortage is going from bad to worse. Here's why you should care.

Bloomberg, Vildana Hajric, 2 mei 2021, Intel CEO says chip shortage will persist for ‘couple of year’.


Share article

Published on May 18, 2021.