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> “…strategically bought…” That’s a key phrase here. Did others do the same? If they didn’t then why not? And if they did, then they are surely profiting from

by alimov 4y ago

> “…strategically bought…” That’s a key phrase here. Did others do the same? If they didn’t then why not? And if they did, then they are surely profiting from the shortage as well. I wonder how long this can go on for… I mean if you can make less of something, and make 2x or more (in your example) profit from it then I’d guess some businesses might not want this kind of arrangement to end.

swamp40 4y ago
I consider this economic warfare. I suspect disruption and chaos are the end goal, and the monetary gain is just the cherry on top. Once the supply chain starts to catch up, they will dump everything at once and possibly ruin the manufacturers if they aren't careful. And careful mfgs means supply disruptions will be extended even longer. I mostly posted because it doesn't seem like anyone is even noticing the coup. There will be laws against this kind of thing some day, in the aftermath.
- monocasa 4y ago
  I mean, there is economic warfare going on, but this is probably the most civil fronts of this war. There's been enough tit for tat (particularly at the intersection of the semiconductor space and china) that it's hard to get mad at this. I don't really have a problem with cornering the market, but instead the state sponsored economic espionage and sanctions intended to cut the country off from further development are the root causes here that result in heavy handed techniques like this article is talking about.
- alimov 4y ago
  > “I mostly posted because it doesn't seem like anyone is even noticing…” What do you read / use to stay current on what you are referring to as a coup? Are you noticing these trends / events because you are a frequent buyer of related technologies or is it out of interest or maybe some other reason? Do you think more manufacturing will be moving to the states or out of Asia in general as a result of what’s happening now? You mentioned that you believe there will be laws against this kind of thing in the future, but depending on the state of global affairs/ economic alliances laws like these would be difficult to enforce (imo), so would a more direct solution involve countries producing their own chips / (whatever else is being hoarded now)?
  - swamp40 4y ago
    I'm a design engineer. I've been crossing components almost every day for over a year now. There is no end in sight and it is getting worse. Companies will start to fail in 2023 if they can't ship product. And then the ripple effect will start. I doubt wafer manufacturing is coming back to the States in less than 10 years. I'm not sure the best way to make laws, but something will be done when the damage is clear. Chinese sanctions wouldn't surprise me.
CamperBob2 4y ago
Did others do the same? Yes, and that's part of the problem. It's not just hoarding by Chinese brokers. There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands... just as many/most of us had a garage full of toilet paper last year that we are only now working our way through. Our factory rep says it's getting hard to walk down the hall between the floor and the receiving dock, given all the boxes stacked up everywhere. They are sweating their next fire inspection.
- alimov 4y ago
  > “There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands...” And I’m guessing nobody wants to re-sell (at somewhat regular prices) or there is no mechanism to return excess stock of goods to a distributor that can then mark the price up a little to make it worth their time? I don’t know how this works, so please excuse the kinds of questions I’m asking.
  - sct202 4y ago
    They'll resell overstock to a broker for a slice of that price gouging.
- snovv_crash 4y ago
  Everyone I know in the business went from doing JIT parts acquisition to making sure they have a year worth of components, for everything. It's the toilet paper issue again, only this time it's industrial manufacturers. The correct way to solve this would be to set up a futures market on the parts. This way people who really need certain quantities at certain dates can still access them, and hoarders can put a price on the stock they're sitting on.
- swamp40 4y ago
  The majority of the buildup is because 99% of the parts are in, but production cannot start until the missing few parts appear. That's the genius of the bottleneck hording approach. But you still need ~$100 Billion dollars to pull it off, which mean only a few players in the world could do it. The problem comes from sitting on that 99% inventory for so long that the bills come due. Normally you get 45-60 days to pay and you sell your product by then so your cashflow is fine. But now, you need to get loans, interest rates are rising, etc. There is a finite time that companies can hold on before it all comes crashing down.

by alimov 4y ago

swamp40 4y ago

I consider this economic warfare. I suspect disruption and chaos are the end goal, and the monetary gain is just the cherry on top. Once the supply chain starts to catch up, they will dump everything at once and possibly ruin the manufacturers if they aren't careful. And careful mfgs means supply disruptions will be extended even longer. I mostly posted because it doesn't seem like anyone is even noticing the coup. There will be laws against this kind of thing some day, in the aftermath.

monocasa 4y ago
I mean, there is economic warfare going on, but this is probably the most civil fronts of this war. There's been enough tit for tat (particularly at the intersection of the semiconductor space and china) that it's hard to get mad at this. I don't really have a problem with cornering the market, but instead the state sponsored economic espionage and sanctions intended to cut the country off from further development are the root causes here that result in heavy handed techniques like this article is talking about.
alimov 4y ago
> “I mostly posted because it doesn't seem like anyone is even noticing…” What do you read / use to stay current on what you are referring to as a coup? Are you noticing these trends / events because you are a frequent buyer of related technologies or is it out of interest or maybe some other reason? Do you think more manufacturing will be moving to the states or out of Asia in general as a result of what’s happening now? You mentioned that you believe there will be laws against this kind of thing in the future, but depending on the state of global affairs/ economic alliances laws like these would be difficult to enforce (imo), so would a more direct solution involve countries producing their own chips / (whatever else is being hoarded now)?
- swamp40 4y ago
  I'm a design engineer. I've been crossing components almost every day for over a year now. There is no end in sight and it is getting worse. Companies will start to fail in 2023 if they can't ship product. And then the ripple effect will start. I doubt wafer manufacturing is coming back to the States in less than 10 years. I'm not sure the best way to make laws, but something will be done when the damage is clear. Chinese sanctions wouldn't surprise me.

CamperBob2 4y ago

Did others do the same? Yes, and that's part of the problem. It's not just hoarding by Chinese brokers. There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands... just as many/most of us had a garage full of toilet paper last year that we are only now working our way through. Our factory rep says it's getting hard to walk down the hall between the floor and the receiving dock, given all the boxes stacked up everywhere. They are sweating their next fire inspection.

alimov 4y ago
> “There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands...” And I’m guessing nobody wants to re-sell (at somewhat regular prices) or there is no mechanism to return excess stock of goods to a distributor that can then mark the price up a little to make it worth their time? I don’t know how this works, so please excuse the kinds of questions I’m asking.
- sct202 4y ago
  They'll resell overstock to a broker for a slice of that price gouging.
snovv_crash 4y ago
Everyone I know in the business went from doing JIT parts acquisition to making sure they have a year worth of components, for everything. It's the toilet paper issue again, only this time it's industrial manufacturers. The correct way to solve this would be to set up a futures market on the parts. This way people who really need certain quantities at certain dates can still access them, and hoarders can put a price on the stock they're sitting on.
swamp40 4y ago
The majority of the buildup is because 99% of the parts are in, but production cannot start until the missing few parts appear. That's the genius of the bottleneck hording approach. But you still need ~$100 Billion dollars to pull it off, which mean only a few players in the world could do it. The problem comes from sitting on that 99% inventory for so long that the bills come due. Normally you get 45-60 days to pay and you sell your product by then so your cashflow is fine. But now, you need to get loans, interest rates are rising, etc. There is a finite time that companies can hold on before it all comes crashing down.