Technical supply chains are still a complete mess

Last week, we stated that technology production is uniquely vulnerable to pandemic issues, through a combination of just-in-time production practices and a widespread network of suppliers. But a week later, the news is even worse.

On Friday morning, analysts at Panjiva Research from S&P The picture was grim, with US sea imports from China (including most electronics you buy) dropping by more than 50 percent in the first three weeks of March, due to the nationwide lockdown in China. At the same time, the subcontractors who actually build the hardware (the best known is Foxconn, but there are of course many) are thinking about leaving China completely, at least as much as they can. Wistron Corp, which does a lot of work for Apple, boasted last week that within a year it could move as many as half of its activities outside China’s borders.

It is a huge turnaround in technology production and while it has been building for a long time, the pandemic will make it a lot faster and messier. It also means that while these companies are looking for labor and parts, they will also be scrambling to set up a whole new set of factories.

At the same time, there are real concerns about the lithium supply chain. A benchmark report outlines the quarantine situation for a number of major lithium exporters, from Australia to Chile, and while there have not yet been severe shortages, mines have great difficulty in picking up shipments. “It is not orders and it is not production, it is [about] can we have it shipped? said a mining CEO. “Can we get the ships? Can we get the containers? “The result is a lot less lithium for manufacturers, which can be a huge problem for anything with a battery.

It is difficult to say what all this yields. It is getting more and more difficult to make electronics, but with so many people out of work, there is less demand to meet. If the factories are half closed, it may not matter if the lithium shipment arrives a little late. The current situation is so chaotic that it is difficult to be sure of anything. But the result is scary news for anyone trying to get a shipment of phones on time – and you can bet there’s a lot of chaos going on behind the scenes.