Despite clients' strong short lead-time orders, the server supply chain is currently facing shortages of both components and labor, hindering their shipments in the second quarter, according to industry sources.
Several Southeast Asian countries such as the Philippines, Malaysia and Singapore, have recently extended their lockdowns trying to contain the coronavirus, but such measures have undermined the supply of server components from these countries.
The labor shortages are the most serious issue for suppliers in Mexico. Mexico has also locked down cities, and the suppliers' local production lines have been unable to recruit sufficient workers, not even by offering extra wages.
At the moment, Amazon Web Services (AWS), Microsoft and Google are the datacenter players that have acted most keenly acquiring servers, as demand for their services has been rising rapidly due to the pandemic.
In addition to US-based datacenter clients, demand from China-based ones has also picked up.
Malaysia has extended its lockdowns to June 9 but has eased some of the restrictions. The Philippines has also prolonged the lockdown of its capital Manila to June. Manila has been locked down since March 17.
Singapore was originally set to lift its lockdown order on May 4, but has already extended it to June 1 due to the resurgence of the pandemic.
Server makers including Foxconn Technology Group (Hon Hai Precision Industry), Inventec and Wiwynn, all have factories in Mexico to serve clients in North America.
Since workers in Mexico are all eligible to receive minimum wages without going to work after the lockdown, most workers are unwilling to take the risk of being infected. To attract workers, the server makers have given extra pay that is covered by clients, but the labor shortages are still serious.
Component and labor shortages are crippling the server supply chain
Photo: Digitimes file photo
Article translated by Joseph Tsai
