Market shortage of wireless Repair Parts

Why is there a part shortage now?

Many factors and dynamics are causing this shortage, which is a bit different situation compared to Pre-COVID. This time around, things might take a little longer to go back to normal.

As you may have noticed, your store and shop may be busier than usual. It is also the case in every part of the world since many stores, including carriers, are currently closed. All the traffic for repairs is now directing to repair shops like yours. Consequently, all suppliers are also buying more than before to make sure the supply chain is stable.

Following the supply chain, factories also face the same issue; their production needs to increase. More output means more raw material is required. Despite the production happening in China, the raw materials come from Hong Kong. The control of imports and exports from Hong Kong to China and from China to Hong Kong is increasing due to various reasons, including COVID prevention. The delay in logistics and the increase of production create a unique issue affecting our supply chain directly.

Outgoing shipments to the USA or any other part of the world, for that matter, are also affected. Cargo companies (UPS, DHL, FedEx,...) are also not at full capacity and are now serving Asia first, taking away the opportunity for other companies to receive shipments, such as ourselves.
Passenger aircraft, which usually helps to carry cargo as space permits, is also limited by COVID travel restrictions, increasing the load even more on cargo aircraft. One more factor to consider is the lack of cargo traveling to China from the USA, which naturally adds cost to the shipments since many flights return empty or not at full capacity.

As you may be aware, the USA banned Huawei & other China Manufacturers last month from purchasing IC chips from American companies. To better understand the effects of this new policy on a Huawei device, although it is made and assembled in China, it relied on US-based component manufacturers, which are about 25% of the total value of hardware components.

After this policy took place, major Chinese Manufacturers immediately placed large purchase orders from other IC component Factories. Because of their volume, most Chinese manufacturers booked all the IC companies' production in advance for the entire year. These IC component factories would serve our repair industry regularly. Now, with more prominent clients, we are on the waiting list until these IC factories level off their production times. The IC chip is an essential part of an LCD replacement (think of it as an engine to your car).

When will the supply chain be healthy again?

Although it is impossible to know the answer to that question, we are optimistically expecting one to two months. We think the repair stores will continue to thrive and have business more than usual because of factors such as carriers not being opened, but with that, it will also come into a supply and demand issue. We believe pricing will continue to surge, and we could see an increase of 10-30% depending on the product. Some products will not be available regardless of what the market is willing to pay for it. Although the market is still open and active, the market does not have readily available goods, nor would the factories.

What is MobileSentrix doing to help in this situation?

As always, you are our priority, and more than anything, we want to inform our clients once we feel that a situation is something that can affect your store or your inventory levels. Our procurement team is instructed to order in much more extensive volume and pre-buy, regardless of MOQ requirements, otherwise not possible. In return, our purchase increase will help our clients in this time when shortages will start to occur. Generally, when there are shortages, you will begin to see inconsistencies in packaging, quality, and product standards because many suppliers are looking to fulfill the order and compromise on the inventory versus an out-of-stock situation. Fortunately, it is not something that we would be doing as it compromises the reliability and quality standards that you would expect from us. We will not increase pricing because the market is rising but instead keep or maintain a lower price to the best of our ability.
As the situation changes and we receive updates, we will make sure to keep you updated with the market situation. We want to thank you for your continued support, and thank you for your business.