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Supply chains and prices under pressure: laptop launches threatened with further delay

Leipzig, Germany, February 21st 2022 – China is reacting to new outbreaks of the Omicron variant of the Coronavirus with partial lockdowns. This could further delay the availability of laptops with 12th Gen Intel Core processors and NVIDIA’s Ti graphics cards, which debuted at the beginning of the year. The first factories have already been closed in Suzhou in the east of the country. Supply chain and logistics bottlenecks, a shortage of certain chip types and price increases are already on the horizon.

Partial closure of factories in Suzhou

While component and chip shortages primarily affected the desktop PC market last year, the situation now threatens to become more serious for laptop manufacturers following recent developments in China. According to a Forbes report, local authorities responded to an Omicron outbreak in the Suzhou Industrial Park in eastern China with a partial shutdown on Tuesday, to break the infection chains. The current measures affect factories such as those of Bosch, the semiconductor manufacturer United Microelectronics Corporation (UMC) and Samsung. Other production plants have already been ordered by the authorities to temporarily shut down and called for regular testing and manpower re-organisation. Suzhou is one of the country’s high-tech development centres and is also home to the factories of XMG’s ODM partners Uniwill and Clevo, among others.

Limited transportation resources put strain on supply chains

New challenges also lie ahead in the area of logistics, because even components and laptops that have already been produced often only make it to the next factory or to the destination country for sale with a long delay, due to increasingly limited transport resources. The logistics companies are already running at full capacity, which further fuels the increase of transport costs and makes the new laptop generations noticeably more expensive. These increases are in addition to higher purchase prices for individual components, base materials and raw materials.

The lockdowns in some areas of Suzhou are further accelerating these issues: according to local XMG partners, the DHL hub in the city has now also been affected by the shutdowns.

Key components are in short supply

Special key components for laptop production, such as power ICs, are still in very short supply and, if available at all, can only be obtained in a roundabout way and at a much higher purchase price than usual – another aspect that could potentially stall the production of entire model series. According to current media reports, the general IC shortage could continue throughout the industry until 2023.

“At the moment, we are receiving daily updates from our partners and suppliers regarding the postponement of delivery dates. Sometimes these delays amount to several weeks,” says Tom Fichtner, Senior Product Developer at XMG, who is based in Taiwan and thus close to the production artery of the laptop industry. “Although we were able to present our new XMG NEO 15 (E22) with OASIS liquid cooling at the beginning of the year and are still assuming availability from mid-March, other laptops such as the new XMG FUSION 16 or the revised XMG PRO series with Intel’s 12th Gen Core CPUs are still pending. At the moment, it is neither clear when these will be available, nor at what price – because the increasing component shortage and rising logistics costs make early costing and planning difficult.”

SSDs become more expensive

Meanwhile, price increases for SSDs are also threatening trouble. The use of contaminated chemicals in two joint semiconductor plants of Kioxia (formerly Toshiba) and Western Digital in Japan rendered at least 6.5 exabytes of already produced memory unusable – roughly equivalent to the capacity of around 6.5 million 1-terabyte SSDs. Together, the two companies are responsible for more than a third of global NAND flash production. As a direct consequence, the market research company TrendForce predicts a price increase of up to 10 percent for the second quarter of 2022.

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