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Tech firms struggle to scale amid server hardware shortage

COVID-19 lockdowns continue to disrupt China's mammoth manufacturing industry

Server technician

Technology companies are struggling to scale their businesses following the COVID-19 outbreak thanks to a server supply shortage triggered by the closure of major hardware manufacturers in China.

According to internet infrastructure provider Heficed, the resulting demand - which cannot be served by the current stock supply - has left firms without the resources to build and maintain their network infrastructure.

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In order to contain the spread of coronavirus, China temporarily shut down most of its factories earlier this year, putting a halt on exported goods such as data processing machines and their components.

Inability to staff the production lines and during the lockdown has resulted in a “significant server supply shortage” in the market, Heficed said, and although many businesses have now restarted their work, they still have a long road ahead to mitigate long-term industry damage.

“The sudden stop of operations in China had a drastic effect on the industry, immensely limiting the available hardware supply,” commented Vincentas Grinius, CEO of Heficed. “We usually stock up for at least a few months in advance, which proved to be a vital decision, which allows us to maintain our operations on a pre-virus capacity.

“Other hosting providers aren’t so lucky, as most of the storage facilities have been emptied clean, so you can’t simply stock up on required resources.”

With the disruption in China, tech businesses began to look at other major markets such as the US for their resources. However, that avenue has also posed issues with delivery, Grinius added, with delivery companies either doubling their prices or stopping shipments entirely.

“Delivery is no longer a rational choice,” he explained. “Prices for shipping rose from a few hundred to a few thousand dollars: if you would compare it to our previous delivery expenses, costs jumped by at least a 150 percent.”

Hosting companies not adequately prepared for hardware disruptions will struggle to onboard new clients and unlock potential revenue resources, while end users may experience lag in information processing. Businesses can mitigate this by using dedicated bare-metal servers for flexibility to enable continuous scaling, Heficed said.

Additionally, the sudden increase of remote workers will place a “tremendous strain” on the internet, with heightened demand for conference calling, secure VPNs and remote desktops. However, the provider says this pressure can be reduced through the IP address market and encourages companies with unused IPv4 assets to consider IP address leasing to provide more resources for ISPs in need of network infrastructure.

The partial collapse of the server supply chain will also continue to have a knock-on effect across the industry, with unprepared SMEs facing the prospect of losing their standing in the market, the provider warned.

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