Coronavirus Hits PC Hardware Manufacturing Hard: Z490, AM4, & Computex

by birtanpublished on October 1, 2020

except you can't wipe your ass with it
well I mean we're going to take a gamble
on the YouTube D monetization system and
talk about the impact of coronavirus on
the computer hardware industry yes yes
we set it but we'll only say it once
from now on at last YouTube angers that
repeated offenses of saying the word
will refer to the global pandemic mostly
as human malware though it sounds like
it might not be demonetized as much
anymore when we last for Taiwan the
situation was only just developing in
the US and Taiwan had things very
controlled and still does but things
changed drastically in the West during
the two weeks we were in Taiwan we spent
some time gathering information on the
ground as the situation developed and
learned that human malware has cost the
industry millions and motherboards and
video card production alone and that's
just the board partners in this video
will report on the numbers we've
gathered relating to delays and hardware
industry impact resulting from human
malware before that this video is
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Squarespace as the situation became much
more severe in the last week or so we
noticed a significant fall-off in
viewership against our normally very
accurate estimates for viewers our
factory tour series was on track to do
100,000 views per video at a minimum but
we've been competing against global
non-stop coverage of the pandemic we'll
be talking in this video about how it
relates to the computer hardware
industry in an objective fact-based
approach and we would like to encourage
a rational approach to the conversation
rather than a panic driven one just like
we talked about a few weeks ago when we
discouraged panic purchasing of a
commodity computer hardware so we're
going to talk about the impact of human
malware on the computer hardware
industry we have some value
to adhere from the PC side and we have
some unique information that we've
collected on the ground in Taiwan where
most of the companies that you purchase
things from are headquartered also a lot
of the factories or in the very least
supply chain level factories so we've
got some unique stuff to talk about
there the factory tour series will
continue after views for normal content
pick back up and stop competing again
with global news agencies stealing every
breath of air time our topics are broken
into three categories for this one so
the thesis if you will is as follows
where you know we talked about the
follow-up on our piece from two weeks
ago where we discouraged panic buying of
computer hardware a couple of people
have asked us how do you feel about it
now so we'll go through that we'll talk
about point number two a discussion on
production delays to new products and
potentially to Computex which would
therefore impact new products and three
factory closures and the number of units
lost to low production or factory
capacity so that's going to be units of
products not we're not talking dollar
amounts I don't have the exact cost of
the product and that's a much more
complicated equation anyway but we're
talking about how many motherboards
video cards whatever haven't made it to
the channel which would be retailers or
distributors of sorts that otherwise
would have been here if this whole thing
didn't happen so that's our three points
and the third one there should be very
interesting so we've got a lot of on the
ground literally in the factory
information when we visited Taiwan on to
the new topics production delays and
timelines first up here all this human
malware impact has caused delays to
production timelines of computer
hardware clearly we've long discussed
that Lunar New Year alone in combination
of course with a global pandemic and
more importantly combined with the
resulting panic by some people sometimes
deserved more so than others this would
all have an impact to scheduling we
didn't have many concrete examples a
couple weeks ago but after going to
Taiwan and visiting a lot of the
headquarters of these companies we do
now before talking more about the why of
production delays mostly relating to
manpower and raw material availability
we'll give some examples MSI's new x5
Saudi tomahawk was pushed back 1 to 2
months minimally it was supposed to
launch in March but amis I was unable to
get supply from its lower down supply
chain factories in order to
make the board's an example might be the
suppliers of capacitors who although
they might be operating at full capacity
can't get supply from their suppliers
like the metal suppliers or the heatsink
suppliers who can't get supply from the
metal suppliers MSI's primary factory in
shenzhen responsible for millions of
video cards and motherboards per month
was shut down for two full months as a
result of Lunar New Year and human
malware combined the Shenzhen Factory
has ten SMT lines that are 121 metres
long each the ten service mount
technology lines are responsible for
producing 1.6 million motherboards per
month and 1 million video cards per
month as of 2019 the factory requires a
staff of about 5000 people but often
operates at reduced staff because it has
trouble already finding staff in
Shenzhen typically closer to 2,500 and
this depends on order volume so that's a
lot of people who are unable to man the
factory given an extra four weeks of
unexpected total halt of production
that's 2.6 million products from one
factory and from one company that never
made it to the channel and the factory
is currently operating at a reduced
workforce due to slow returns following
quarantines and usual Lunar New Year
worker departures this factory like most
in Shenzhen was already struggling to
find enough workers under normal
conditions as a result of lack of
interest in factory jobs these days and
the service job boom in China now that
it's competing with a pandemic it's
having even more difficulty with
manpower in terms of real impact that's
again about 2.6 million products based
on numbers from last year fewer that
could have been made in one month of
extra downtime at one factory not
counting the reduction capacity from a
smaller workforce one of the many
affected products was the x5 7e tomahawk
which has now been pushed back to April
or May although may looks more likely
that gives you the first concrete
example most of these companies although
they often don't own the factories or at
least not all of the ones that they work
with they have partner factories that
they work with companies like power
logic which is responsible for making a
lot of the fans that are used in video
card heat sink fan combinations that you
see in the industry they're a lower down
supply chain manufacturer that could
also be impacted which would have again
a knock-on effect to the company that's
buying those fats which would be a
messiah EVGA Giga Byte whomever so
only to AIB Partners have any meaningful
capability of producing parts in Taiwan
which is less affected and that's
gigabyte an EVGA the gigabyte solution
they have their own factory that we've
toured before we have the video up on
the channel if you want to see it it's
located in Dalian County and they've
told us in the past that this Factory is
typically reserved for high-end products
right now it's used to make anything
they can the company makes its higher
order volume parts in China typically
and it's been impacted there similarly
to a mossad EVGA meanwhile doesn't own a
factory and instead relies on suppliers
who are now located at least partially
if not primarily and I want some of
these companies like EVGA and gigabyte
started to shift their manufacturing to
Taiwan once the tariffs were becoming a
concern last year the companies that
were angling themselves to thwart the
tariffs by relocating factories to
Taiwan
sometimes Thailand sometimes Vietnam
those companies are going to be less
affected well at least the ones in
Taiwan anyway less affected by this
pandemic because they were trying to
combat something else so Eva J in that
instance would be a bit better position
than some of its competitors for
gigabyte the company's Taiwan factory
makes 200,000 video cards and 200,000
motherboards per month on average as of
2019 the factory also makes 50,000 units
of PCBs that it sells to other parties
or uses in its other product categories
that's 450,000 units per month produced
of products and have some tea lines
which is a lot for a more real estate
constrained Factory in Taiwan especially
considering the higher labor cost that
factory had a period of halted or
reduced work as a result of the human
malware outbreak and trying to contain
it this contributed to a reduction in
products to the channel of at least a
couple hundred thousand units
compounding when considering Lunar New
Year also around the same time gigabyte
has also disallowed any visitors to its
factory
although we were able to get access to
the company's headquarters in Taipei for
overclocking and interview content the
ban on visitors to the factory extends
beyond third party companies like ours
and to internal employees who've
traveled recently like those who might
be flying in from the US to visit the
Taiwan factories this will slow down
production
significantly this information was
before Taiwan closed its borders mind
you so now some of that is moot since
there's a greater override in place at a
government level but we're talking about
the last month or two rather than now
and separately this is broken out from
that meme going around of how many we
can now find out how many medians could
have been emails instead because we're
talking about product managers product
developers designers people who need to
see physically the product or
potentially the production line in order
to call shots on how it's made so you
could have a quality hit there if they
can't make it out there or you could
have a delay to the product coming to
market if someone absolutely needs to
see it in person at least someone who is
from the US office instead as for HQ
gigabyte has restrictions in place that
require masks constant washing of hands
and forbids anything like a handshake
none of that's particularly relevant to
production but the restriction to
outside visitors is we were only able to
visit because we'd been in the country
for two weeks already which has passed
the recommended quarantine period and
because we were relegated just to the
conference room off of the main entrance
to the building we weren't allowed to go
into any of the labs this time from
product managers or other internal
workers this could end up canceling
trips entirely since they'd just be
sitting in a hotel room for two weeks
and that'll slow down production since
those people are needed for oversight
and final approval of products and it's
also kind of a waste of their time if
they could instead be in the u.s. doing
a lot of their work there instead of a
hotel room which cost money over time we
can't say which of the two CPU companies
is affected for this particular item but
this example is a CPU press event the
motherboard company is on the ground
informed us off record that one of the
companies was planning an event for
March relating to a training day for
system integrators and a demonstration
day for media members some of the
professional overclockers who work at
motherboard companies were traveled to
scheduled to travel to California for
this event but had to cancel as a result
of human malware concerns the cpu event
seems to have been silently cancelled as
well it technically wasn't officially
announced yet so that's okay and this
could have implications for review and
timings for launches of new CPUs because
motherboard manufacturers are running
behind on production anyway this ends up
working out for them in this particular
instance and it's probably all
together to begin with we reckon with
coolermaster and Lian Li over the past
few weeks for factory tours we learned
that both companies have important
product launches planned for right
around copy tax which would be the last
week of May and the first week of June
we actually recommended that the
companies consider LT acts as an
alternative launch venue since Computex
will likely be cancelled and that's
another topic entirely but that will
depend on if things are under control
before August in the very least some of
these products pending the likely
postponement of Computex by tight rrah
will be delayed to third quarter some of
the case manufacturers are also now
working from home – as our Intel Dell
and AMD except for crucial meetings or
people who need to be on site like
warehouse workers this will cause
efficiency and product quality issues in
production as well after what seems like
already countless delays we've got three
other concrete examples for you
AMD's B 550 is now anticipated for
launch after what would be Computex if
it happened at present the B 550 chipset
which is explicitly different from B 550
a mind you is due for an end of June or
early July but that's still uncertain Z
for an idea was rumored online for
launch before combi tax but we've been
told that the impacts to the factories
at a motherboard level and the very
least could cause delays beyond the
initial launch period for board
availability in the least and it'd be
likely that Intel would probably align
its launch when with with–when
motherboards would be available
otherwise kind of be shooting itself in
the foot we've also heard from partners
in the industry that entails
much-anticipated ghost cannon nook will
be delayed at least a few weeks if not
longer this is also due to the
production capacity limitations
resulting from Corona well shorten it I
guess
Kurt's cos øx got away with it so maybe
we will hand and you have to remember
there's a lot of partners tied into that
ecosystem the ghost Canyon nook
ecosystem because Intel although they
sort of speck it out they design it they
do the silicon they are not making at
least entirely on their own the board
the risers the case the power supply all
that stuff comes from other people which
is normal there's nothing wrong with
that that's normal for a product but the
point is that each of these
manufacturers suppliers has delays on
its own pipeline and that's going to
cause the final product to be delayed
because they can
the parts for it here's another one this
one's pretty big for a concrete example
for you production delays copy tax is
likely another victim of human malware
side-channel execution attacks the event
is the industry's largest and most
influential each year it can dictate
whether products succeed or fail when
they launch and it sort of lines up the
rest of the or at least the following
quarter it's around the same time every
year end of May early June and at this
point probably gonna be canceled or
postponed rather but they haven't
officially said anything so although
some people like to brag about how they
don't watch show coverage the reality of
it is that most people do that's fine if
you don't like it but most people do
watch it and it does drive the industry
for the rest of the year so as an
example just looking at us alone not
even talking out the people who make the
products but just the people who talk
about the people who make the products
we can typically triple or quadruple our
viewership in a week from coffee tax or
from CES same thing roughly and that's
important for us because it gives us a
revenue boom that we need to sort of
fund bigger projects throughout the year
and that's true for most the other media
people too and they often last by the
way for more than a week because the way
the YouTube algorithms built you have
high viewership for a while it's like
wow you're doing the million views for
per 48 hours rather than your usual
whatever it is so your channels to
dhamaal so it it boosts you for some
period of time that's not quite known
but it seems to have knock-on effects
right least a month so that's going to
be a big deal if it's cancelled for the
media and it'll be a big deal for the
hardware companies too even if you don't
watch Computex coverage without a major
venue to announce products it's likely
that the products will instead be pushed
back to later launches in the year later
events in the year which will create an
economic slowdown and ripple effects to
the financials for every company
involved in the computer hardware
industry especially including youtubers
and when we reached out for comment
Taiwan's Tourism Council which runs
Computex by the way tight rene i tra
simply told us that it would update us
on the status later and had no comment
at this time
we spoke with our hosts during the tours
and learned that tight rrah is currently
asking manufacturers for
opinions on if the show should be
postponed or canceled or held and
because so many travelers for coffee tax
come from China especially the companies
that are headquartered in Taiwan they
have factories in China as almost
everyone does it looks like due to the
travel restrictions most companies are
recommending postponement of the show
currently further from a PR standpoint
it would look at this point anyway
irresponsible to rally hundreds of
thousands of people together including
high-profile reviewers with influence to
potentially cause an outbreak because
this there's no wedding that PR battle
and we suspect the event will be
postponed it also becomes difficult to
market your event to exhibitors in the
future because you're saying something
like I'm pulling these numbers out of
the air but you know hundred thousand
year or visitors 150,000 200,000 you
always want to show growth and then whoa
suddenly it's down to a hundred thousand
because everyone didn't want to they
were scared they didn't want to go or
they couldn't go or their travel
restrictions and that just looks bad
because what are you supposed to do next
year say oh I just ignore that data it's
bad that was because of the thing going
on so the current rumor is that it will
be pushed into August or September
we heard September more than August
although tighter would not confirm when
asked it's effectively an entire quarter
of slowdown though for the industry last
point we've had a lot of people in the
comments asked us if we still hold our
position on not panic buying hardware
right now our position originally was
that no you absolutely should not be
buying computer hardware right now just
because you want to make sure you get it
before someone else does that would put
you in the same category of people who
are panic buying toilet paper except you
can't wipe your ass with it well I mean
no I don't think well maybe a GT 1030
but generally you can't actually I
wonder if you could repurpose water
coolant pumps as a bidet and I've spent
too much time in Taiwan anyway that puts
you in the same group of people except
it's a commodity it's not even something
that you need to use is the point
generally speaking computer hardware
despite potentially looking at a
shortage actually almost certainly
looking at a shortage in the near term
for sure it's just it's not some
than you need to survive and ultimately
our concern in that video was that panic
drummed up by internet comments online
would cause people to spend money on a
gaming PC when they should be worried
about something that's probably more
important if you were a couple weeks ago
of the opinion that the economy was
going to crash and therefore you have to
purchase a gaming PC now before all the
parts disappear our counter to that was
well ok but like what if you lose your
job because that's really the the real
consideration it was that anyone who was
concerned about the impact of the world
of gaming computers should have looked a
bit past that and thought what's the
impact to my life externally from gaming
computers and will that have a knock-on
effect so we still stick by that and I
personally feel pretty good about
advising against panic buying just
because you want to make sure you get
something before all the parts disappear
because now people have been in the two
weeks since we posted that video anyway
countries globally have experienced
temporary business closures service
industries were hit especially hard even
in the US where we often benefit from
being a bit more spaced out
geographically we're still seeing
restaurants closed and service centres
close as non-essential businesses
stripped down their hours and even
essential ones do so of course you'll be
fine if you work at Gamestop according
to the latest news out of them but
anyone else might have a bit more to be
concerned about the computer hardware
all this said will reiterate what we
said in our first video on the subject
which is that a lot of people are going
to need their money that be spent panic
buying PC parts a few months early for
other things like food and rent
especially in those sectors where
they're the hardest hit by shutdowns so
a lot of people lost hours and wages
overnight we'd say that yes we made the
right call if you are in an industry
that's not impacted maybe you're
self-employed and you're not impacted
which would mean that you're not a
youtuber or you are per hat
maybe you are but in a different
category or maybe you are just wealthy
there's nothing wrong with any of those
things it just means that you should
still follow the basic advice anyway of
only buying when you actually need
system not just because you want to make
sure you get it before someone else does
okay so back to reality then now that
we've gone through the facts the data
we've gathered on the ground in Taiwan
which is about as close as you can get
to the source of this stuff it's time to
bring everyone back to reality if it's
not all doom and gloom so a first
reminder in Taiwan most the companies
are headquartered there including
companies that you often perceive as
being headquartered in the u.s. EVGA is
one of them and the people who work in
the Taiwan age queues are going to be
the closest to actual information
especially for things like copy tax
because I mean that's that's tighter
that's basically the Taiwanese
government putting on that show or at
least the Tourism Council so the
information can't get much cleaner than
the people who work in Taiwan at the
headquarters where the companies are
actually making their decisions gigabyte
has a u.s. headquarters and it has
important people there but all of the
decisions come down through HQ real HQ
in Taiwan and that's gonna be true for
mostly companies EVGA as well so that's
a good place to get clean information
most of these issues though they're
related to product delays or slightly
inconvenient processes like the
requirement to wear masks as a visitor
to the country when you're visiting
factories or the requirement be
thermographic ly checked at the entrance
to buildings basically every VIP
building we went into it was either a
thermal camera or just a laser
thermometer they pointed at your head
when you walk in kind of debate the
accuracy of that but that's another
story especially given that there's no
training for the people often using that
but whatever anyway it's like I
challenge your testing methodology for
my thermals the you know who I am I
invented out-of-the-box thermals but
actually that was a viewer but yeah so a
lot of the stuffs inconvenient or kind
of annoying but there are product delays
there's going to be an economic hit to
the industry I'm not an economist I
don't know how bad it'll be I don't
foresee it being doom and gloom
everything's over it's all like it's the
end I'm not really in that camp so when
I see currently switching over to I
guess informed opinion from some of the
so that we shared I see the industry
being on track to lose one to two
quarters of progress and that's why I'm
reaching economic impact to the industry
we're gonna see a slowdown I'm sure the
other youtubers could see a slowdown or
at least less viewership than they might
have otherwise and we've already seen it
in an indirect way because we've noticed
viewers are not able to get to the
content that isn't related to the virus
which is in part a YouTube thing it's in
part timing I guess but you're looking
at a challenge where there's probably
more content right now being pushed to
YouTube then typically would be the case
and a lot of its around one topic and
the way the algorithm works is it sucks
you into a topic and then it it doesn't
spit you back out again until you stop
watching that content so people are
probably stuck in this vacuum of virus
content and this is our way of getting
them back is basically what I'm saying
but hopefully it provides some actual
value for you and I apologize if you
didn't want to hear more virus
discussion from our channel because I
didn't really and I get it I don't
really want to do it I'd rather do
computer stuff but at least this has
computer news in it so anyway it looks
like we're on track to lose a couple
quarters of progress here as an industry
computer launches hardware launches
stuff like that
most the news organizations right now
are talking nonstop about human malware
because if it bleeds it leads and they
are more doom and gloom oriented so just
to remind it from us it's not the end of
the world there will be a delay we would
advise still that you don't just buy a
computer hardware because you want to
make sure you get it before it's out of
stock because there's gonna be more
especially because there's new silicon
launching this year anyway whether or
not it's delayed so unless you need
something now you shouldn't really be
buying but that's pretty much always
true alright so we've tried to stick to
the facts and the numbers for this to
avoid encouraging any sort of panic and
like before advisors taking a rational
approach focus on things outside of
buying a computer it's just not that
important you can always get it later in
the year the biggest problem here
ultimately is supply chains and the
lower down supply chain availability and
factory uptime and that is improving
right now we know that a lot of the
factories have gotten their workforce
backup from as low as 10% and from
furloughing if that's an appropriate use
from putting their employees on furlough
for two days a week they've kind of
covered from that now it's a matter of
getting supply and that's gonna take
some weeks as well but things are
recovering at least in the production
side of the industry now it's gonna be a
matter of getting the schedule back on
track and that's gonna be it for this
one thanks for watching check out the
main channel go watch our factory tour
series because a lot of people were
excited about it and then I think it
wasn't really getting cycled as a quick
side note we're going to have a video on
our secondary channel G on Steve where
I'm just riding around on an e-bike
talking about the situation currently as
it impacts YouTube in our content
production so we'll link that below if
you want to check that one out and I go
to store my cameras axis net or
patreon.com slash cameras Nexus tops I
directly thanks for watching we'll see
you all next time

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