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The Margin Q4 2021

The Margin Q4 2021

When will the global chip squeezebegin to abate? It depends onwho you ask, but it appears thatit’s going to get worse before itgets better. Predictions rangebetween mid-2022, and possibly as late as2023, but there’s little clarity, what with thecomplexity of supply chains.
Alviva boss Pierre Spies is in a goodposition to know, and as he told our writerAdrian Hinchcliffe for his piece on page 16,the company has six to eight months’ stock onorder that it’s still waiting for. These shortagesare affecting HP, Dell, and Lenovo, but there’sno wait for brands such as Acer, Asus orHuawei. He says corporates tend to want thetier-one brands, and are prepared to wait.

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At the recent Canalys Forum, GeorgeHope, WW partner sales, Hewlett PackardEnterprise, said the supply chain squeeze hasbeen a big problem, but that it’s a problemfacing everyone, including its competitors. It’sa supply problem, he added, not a supply-chain problem. He thought the company hasbeen able to mitigate against it, and it’s takenproactive inventory measures, such as its CFOsetting aside a significant amount of moneyto stock up on things that were going to be inshort supply. “We have a billion and changein inventory on hand for customers,” is theway he put it. The squeeze has also affectedHPE. Reporting its third quarter results in lateAugust, sales fell short of predictions, in partdue to the chip shortage. This was partly offsetby higher PC prices. CEO Enrique Lores said itwas being held back by the part shortage, butthat PC demand remains strong/
Ripple effectAlso at the Canalys Forum was Anwar Dahab,senior vice-president, Channel, EMEA, DellTechnologies, who said many industries werecompeting for the same components, such ascarmakers. He expected the supply problemsto be with the world for some time, and thatthere was a need for more manufacturingcapacity. “But you don’t build a factoryovernight, so we will have some friction in thesupply chain for some time.” However, he saidthat Dell has managed to differentiate its supplychain. “I speak to partners every day, andone thing that we keep hearing is that we’repredictable. There are extended lead times oncertain products, primarily with PCs, and wedon’t have challenges on the infrastructureside, but at least we can give our partnersgood visibility when they’ll get their deliveries.”The shortage is also starting to bite theserver market, at least in Europe, where saleshave now fallen to their lowest ebb in fouryears. According to Canalys, the ripple effectof the chip shortage is ‘imminent’, and thatdatacentre component providers have warnedof longer lead times and higher prices.It seems there’s little that anyone can do,and as Gartner points out, there have been anumber of contributing factors, such as labourshortages in manufacturing and transportbrought about by differing quarantine directivesaround the world. Kamala Raman, an analystat Gartner’s supply chain business, points outthat the world is now less globalised than itwas a couple of years ago, and also suggeststhat supply chains should be diversified. Thatmay be good advice, but cold comfort for thosereliant on semiconductors from the East.

Matthew Burbidge
Editor
matthew@itweb.co.za

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