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Network Server Supply Chain Nearing Crisis in COVID-19 Conditions

By Ken Briodagh
March 25, 2020

The Covid-19 pandemic reportedly has compromised the production and distribution of hardware needed to sustain the server supply chain by forcing a temporary shut down on some of the largest manufacturers based in China. This has resulted in a rapidly growing demand, which can be hardly sufficed by the current stock supply, leaving companies unable to scale their business, according to Heficed, an infrastructure provider. When the pandemic escalated, most of the factories shut down in an attempt to prevent further transmission of the disease.

Heficed reports that the scarcity of network servers is felt on a global scale. “The sudden stop of operations in China had a drastic effect on the industry, immensely limiting the available hardware supply,” said Vincentas Grinius, CEO, 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.”

Although the US government had not restricted global trade, according to Grinius, delivery companies either doubled the price or stopped such shipments entirely, creating more supply problems.

“Delivery is no longer a rational choice. 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,” said Grinius.
 

The interruption in the network infrastructure supply affects all members of the business chain, he went on. Hosting companies will be forced to hold back their operations; the lack of technical capacity to onboard new clients will render them unable to unlock potential revenue sources. Consequently, Grinius said, it will impair the quality of service for the end-user: each client’s data will have to share the same servers, which, without the possibility to upgrade, may lead to a lag in information processing.

Current events raised the demand for solutions, enabling remote work: conference calls, secure VPNs and remote desktops. The sudden surge of remote workers put a tremendous strain on the internet, and, based on how the events are unfolding, we will not see a decreasing trend anytime soon. However, the pressure on the network can be lessened by utilizing the IP address market.

The partial collapse of the server supply chain will greatly affect further developments in the industry. Some businesses, especially SMEs, may fall victim to unpreparedness and lose their place in the market. It will all come down to the company’s ability to assemble the required resources and adapt to the new market conditions.


Ken Briodagh is a storyteller, writer and editor with about two decades of experience under his belt. He is in love with technology and if he had his druthers would beta test everything from shoe phones to flying cars.

Edited by Ken Briodagh

Editorial Director

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