One of the most common forms of economic warfare when we talk about great powers is boycott or sabotage, which is very easy to do when we talk about a civilized world where part of the components of the products are made in the land of your greatest enemy. This is what companies have to deal with regarding China, where variants of COVID-19 are serving as justification for temporary factory closures that end up affecting the supply of key parts.
While the Asian superpower is behind in the manufacture of complex components, it is still the largest supplier of the simplest but equally essential parts. Well, once again we have to report a lack of stock of products due to the reduction in production in China.
A partial closure in Suzhou will increase shortages
One of the key pieces in all electronic circuits today is the so-called PMIC, which is responsible for controlling the voltage in all electronic circuits. It is a part that you can find in motherboards, graphics cards and where its largest manufacturer is in Suzhou, in the far east of China.
Well, arguing for general health reasons due to the omicron variant of COVID-19, local authorities have decided to partially close their factories in the region. Thus affecting the supply of this key piece that is used to assemble the circuitry of our PCs. The affected products are obviously those that are going to be released in the short term, such as NVIDIA's announced RTX 3090 Ti and Intel Core 12-based laptops, not to mention DDR5 memory since it is using PMICs and its shortage will continue in the future. the market.
The reduction in activity has not only been at an industrial level, but also at a logistics level. The reason is that the capacity of transport companies in the area has also been cut. This causes a bottleneck in distribution and an increase in the costs associated with it in future products and, therefore, a rise in prices in the cost structure to which scarcity must be added.
PMIC shortage will last until 2023
How long will this out-of-stock situation last? Well, at least until 2023 according to analysts with experience in the matter. Given that it is a common problem that is affecting the entire industry and the geopolitical war, it is very likely that American companies have a plan B as well as those in their political orbit, such as the European Union, South Korea and Japan. Everything points to a relocation of companies out of China to return to their countries of origin, in a move to counteract the problems arising from this new cold war between China and the United States. However, implementing such a solution is not easy to do and takes a relatively long time.