Work-from-home surge triggers demand for laptops, network goods

Photo by Andrew Neel on Unsplash

With more employees working from home to help slow the spread of the coronavirus, demand is surging for laptops and network peripherals as well as components along the supply chain such as chips, as companies rush to build virtual offices.

Many firms have withdrawn earnings forecasts, anticipating a drop in consumer demand and economic slump, but the performance at electronics retailers and chipmakers is hinting at benefits from the shift in work culture.

Over the past month, governments and companies globally have been advising people to stay safe indoors. Over roughly the same period, South Korea – home of the world’s biggest memory chip maker, Samsung Electronics Co Ltd – on Monday reported a 20% jump in semiconductor exports.

Pointing to further demand, nearly one in three Americans have been ordered to stay home, while Italy – where deaths have hit 5,476 – has banned internal travel. Worldwide, the flu-like virus has infected over 300,000 people and led to almost 15,000 deaths since China first reported the outbreak in December.

“With more people working and learning from home during the outbreak, there has been a rising demand for internet services … meaning data centres need bigger pipes to carry the traffic,” said analyst Park Sung-soon at Cape Investment & Securities.

A South Korean trade ministry official told Reuters that cloud computing has boosted sales of server chips, “while an increase in telecommuting in the United States and China has also been the main driver of huge server demand.”

In Japan, laptop maker Dynabook reported brisk demand which it partly attributed to companies encouraging teleworking. Rival NEC Corp said it has responded to demand with telework-friendly features such as more powerful embedded speakers.

Australian electronics retailer JB Hifi Ltd also said it saw demand “acceleration” in recent weeks from both commercial and retail customers for “essential products they need to respond to and prepare” for the virus, such as devices that support remote working as well as home appliances.

CHINA LEAD

China is leading chip demand, analysts said, as cloud service providers such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Baidu Inc quickly responded to the government’s effort to contain the virus.

“Cloud companies opened their platforms, allowing new and existing customers to use more resources for free to help maintain operations,” said analyst Yih Khai Wong at Canalys.

“This set the precedent for technology companies around the world that offer cloud-based services in their response to helping organisations affected by coronavirus.”

China’s cloud infrastructure build-up has helped push up chip prices, with spot prices of DRAM chips rising more than 6% since Feb. 20, showed data from price tracker DRAMeXchange.

UBS last week forecast average contract prices of DRAM chips to rise as much as 10% in the second quarter from the first, led by a more than 20% jump in server chips.

It said it expects DRAM chips to be modestly under supplied until the third quarter of 2021, with demand from server customers rising 31% both in 2020 and 2021.

SUPPLY DISRUPTION

Concerns over supply disruption have also contributed to a price rise.

“You’ve got lots of OEMs and systems integrators in the global market who have intense demand for memory now,” said Andrew Perlmutter, chief strategy officer at ITRenew, a company that buys and reworks used data centre equipment for resale.

“Nobody is shutting down their factories – it is still produced as normal – but people worry about memory supply, in particular, so they want to get out ahead of production.”

About 69% of electronics manufacturers have flagged possible supplier delays averaging three weeks, showed a poll on March 13 by industry trade group IPC International.

Half of those polled expected business to normalise by July, and nearly three-quarters pointed to at least October.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.