Covid-19: Network server supply chain on knife-edge
Major hardware manufacturers have been forced to close up shop due to the Covid-19 pandemic, and this has resulted to the interruption of the server supply chain and the severe complication of operation scaling for tech companies, according to Heficed, a company providing full-range services for IP lease, monetization, and management services headquartered in London, UK.
The production and distribution of hardware needed to sustain the server supply chain has therefore been compromised by forcing a temporary shut down on some of the largest manufacturers based in China, Heficed, a full-scope internet infrastructure provider, added.
Consequently, in a rapidly growing demand which can be hardly sufficed by the current stock supply, this interruption has left companies, which require resources to build and maintain network infrastructure, unable to scale their business, it explained.
When the pandemic escalated, most of the factories shut down in an attempt to prevent further transmission of the disease. China is at the forefront of the industry, as data processing machines and their components are among the top exported goods.
“The sudden stop of operations in China had a drastic effect on the industry, immensely limiting the available hardware supply,” Heficed CEO Vincentas Grinius said.
“We usually stock up for at least a few months in advance, which proved to be a vital decision, which allows us to maintain our operations on a pre-virus capacity. Other hosting providers aren’t so lucky, as most of the storage facilities have been emptied clean, so you can’t simply stock up on required resources,” Grinius added.
Inability to staff the production lines and continue work during lockdown created a significant server supply shortage in the market. Although businesses are restarting their work, they still have a long way ahead to mitigate the damage done to the industry.
Businesses, reacting to the situation in China, started looking at other major markets, such as the United States, in hopes of acquiring the necessary resources. However, this left them facing another problem – delivery.
Grinius said although the government did not restrict global trade, delivery companies either doubled the price or stopped such shipments entirely.
According to Grinius, delivery was no longer a rational choice. “Prices for shipping rose from a few hundred to a few thousand dollars: if you would compare it to our previous delivery expenses, costs jumped by at least a 150 percent.”