There have been multiple reports recently concerning the impacts of the extended pandemic lockdowns on the computer industry in China. DigiTimes articles on this topic, bookending the weekend, appear to provide evidence that the laptop industry is under particular stress in April. According to industry insiders, laptop makers have a lot of worries about their own operations as well as over the wide range of components they rely on during production. However, a sudden and drastic downturn in the Chromebook market might help them make the most of sourcing supplies.
We last reported on the situation in Kunshan, China, three weeks ago, as a new spate of epidemic prevention measures in China is impacting laptop production. Kunshan is a town of particular importance to the laptop industry as Compal, Pegatron and Wistron have manufacturing facilities there. Reports from Shanghai tell a similar story, as ODMs Quanta Computer and Inventec have seen assembly operations disrupted since the city lockdown began on March 28.
The latest news from cities of importance to computer manufacturing in China is that there hasn't been any relief. The lockdowns have been extended and remain stringent. If a factory is outside one of these lockdown or quarantine zones, it is lucky and might operate quite normally. However, some in or near affected areas have implemented "closed-loop" personnel policies to keep the productions lines rolling.
Computers and components makers that are still operating have intense worries about supplies. DigiTimes talked to an insider in the PCB industry, who said that their supplies haven't been as steady as usual, with the nature of some of the chemicals meaning you can't stockpile for certain inputs for more than a few days. Two important PCB makers, Career Technology and Unimicron Technology, halted production on Apr 21 and haven't re-opened in the meantime.
Laptops will be typically assembled from over 1,000 sub-components, and it isn't only the threat to PCB supplies that is putting them on edge. A separate report points to other key laptop component shortage risks. For example, Power Management ICs, wiring, and some chassis materials are reportedly scarce.
Outside of factory operational concerns, the transport of supplies is also affected by the lockdown policy in China. Trucks carrying products and part-works between locations have to undergo lengthy screening processes to ensure that the driver and cargo aren't spreading the virus.
The whole process of manufacturing laptops is complex and different brands, and models made in one location might be affected by shortages of different individual components.
However, readers might be happy to know there is some relief on the demand side of the laptop industry. DigiTimes today reported that laptop makers have seen a drastic drop in Chromebook demand from educators. Moreover, the Russia – Ukraine war has reduced laptop demand in that localized part of the world. Finally, inflation and the rapid increase in essential energy costs have taken a big bite out of many consumers' disposable incomes, moving laptops down the hierarchy of household purchases.
So far in 2022, laptop orders from big brands are down 10% due to the above-named demand reducing pressures. It is thought that things could slow further into summer, but at this time, industry insiders seem confident of a traditional holiday season demand surge and return to pre-pandemic business conditions and cycles from 2023.