Toyota, the world’s largest automaker, downwardly revised its full-year production forecasts in September. Ford has cancelled shifts at its Dearborn F-150 plant in Detroit and General Motors has predicted a profit hit of up to $2 billion. The effects of the ongoing chip shortage are starting to be felt.
And — it’s not limited to the automotive industry. New consumption habits, sparked by Covid-19 and subsequent lock-downs, saw dramatic spikes in demand for devices like games consoles, TVs, computers, and smartphones coincide with production shutdowns. Extreme weather events also temporarily removed multiple plants from operation in the past year, only adding more pressure on chip manufacturers already dealing with demand from the development of tech-heavy products and services.
Demand outstripped supply.
This imbalance is creating not only chip shortages, but due to greater demand for remote working equipment and on-premises IT infrastructure, the availability of circuit boards, resistors, capacitors, and other parts is becoming scarce, directly affecting the data center.
A major exacerbator of the chip shortage has been underinvestment in substrates. Two of the world’s biggest semiconductor companies are now incurring increased costs in their efforts to handle the shortage. Advanced Micro Devices has committed investment into its own capacity, and Intel is working to ease the shortage by partnering with additional suppliers.
With companies shouldering higher costs along their supply chains, price inflation seems inevitable — and has already been confirmed by Robert Johnson, CEO of Vertiv, a market leader in data center infrastructure provision.
For companies already dealing with significant management challenges of operating data center infrastructure, this inflation has the potential to present serious financial and logistical obstacles. There is an indication that even if the chip shortage abates this year, or the next, higher product prices are likely to remain in place.
With normal IT infrastructure budgets drained due to the spikes in capacity requirements and the boom in working from home caused by Covid-19, the chip shortage and the prospect of costs rising further means the profitability, and survival, of some businesses could be threatened.
But Evernex is helping to avoid disruption.
With its expertise in third-party maintenance provision, Evernex can extend the life of IT infrastructure with cost-effective support of up to 70% less than the original equipment manufacturer (OEM), removing the need to replace useful equipment with new. This gives companies independence from End-of-Life (when the OEM stops manufacturing the hardware) and End-of-Service-Life (when the OEM stops supporting the hardware) dates, reducing both company costs and demand on manufacturing supply chains responsible for driving up prices.
In the case that a company needs to purchase replacement or additional hardware to accommodate greater capacity, Evernex’s refurbished hardware offers many advantages.
Refurbished assets from Evernex are inspected, cleaned, tested, and restored to meet original factory specifications. Without compromising on performance or quality, businesses sustain normal levels of operation while increasing return on investment, without the need to purchase new equipment, so preserving chip supplies for where they’re needed most.
Supported by Evernex’s unique Spare parts as a Service, SPaaS™ offering, businesses can access refurbished hardware quickly and with ease from 330+ fully equipped forward-stocking locations worldwide. With over 850k+ multi-vendor items in stock across networking, server and storage assets, the required parts are immediately available to be delivered in a timely manner to ensure business continuity, even during the current climate of disruption.
It is clear when using a combination of refurbished assets and TPM, infrastructure and operational leaders can mitigate the short-term impacts of the shortage. These approaches will reshape our unsustainable consumption of chips by challenging an industry-wide culture of hardware replacement- addressing the urgent appeal for a more sustainable future in IT.