 For today's video, I won't be directly commenting on the recent health related news because A, I'm not a medical professional and B, I don't need my video demonetized. Instead, I'm gonna be laser focused on you, the potential electronics shopper. World events affecting manufacturing capacity and logistics occur every day. And that's why your local computer store has a buffer of inventory, rather than just keeping one of every motherboard on the shelf. Nobody likes carrying inventory because it ties up cash flow, but it's a necessary part of doing business when your supplier isn't right down the street. Now, so far, these buffers, which exist at every stage of the chain, be it raw materials, components, and finished goods, have mostly absorbed the production capacity that's been lost, mostly in China, over the last few weeks. But the cracks are starting to show. So here's my argument. If you're planning an upgrade, I would pull the trigger today rather than do it tomorrow. Let me explain why. This video is brought to you by FreshBooks, the accounting software custom built for how you wanna work, helping you stay organized and productive. Try their 30-day free trial at freshbooks.com slash tech tips. ["Fresh Books Theme Song"] Part of what's made this year's production interruption so impactful is the terrible timing. The Chinese New Year festival is already a period of low productivity in China because most factories shut down for about two weeks while their workers travel home to enjoy some time off with their friends and families. Now, experienced product managers will plan around this, building up some extra inventory to compensate for it. But even for experienced people, two weeks is a long time, and human error or other small roadblocks can already lead to fewer promotions around this time of year, while retailers conserve stock until the factories can kick back up and start shipping product again. Except that this year, they didn't kick back up and start shipping product. February 8th was supposed to be the end of the festival, but instead, it marked the 16th day of the Wuhan quarantine and Hong Kong's forced quarantine policy for travelers from China. Now, I'm recording this video on February 25th, and according to my conversations with industry sources who preferred to stay off the record, as of last week, production capacity at major manufacturers, so we're talking like the Foxcons and Compals of the world, had finally ramped up to about 15%, with this week expected to be closer to 30 or 40, which sounds like pretty good news, but I still stand behind the title of this video. Apple has already issued an update a week ago, citing global supply constraints as part of the reason that they were not expecting to hit their second quarter revenue forecast, and from an unrelated conversation with a major SSD manufacturer, I learned that all of their SSDs are currently on allocation. Allocation means that customers are welcome to place orders for however many units they want, but current supply is not enough to fulfill them all, and the company is working to strategically distribute what they have. Here's the thing, the major players are beginning to return to work, but there are a lot of other moving parts in the machine that puts a shiny new iPhone on your doorstep every year. Right now, the big factories don't have a supply issue because much like a retailer, they buffer the supplies that they need in order to produce products, but those familiar with the concept of just-in-time delivery will know that they try to keep as little on hand as possible under normal conditions. So the subcontractor factories who turn raw materials like copper into finished printed circuit boards for those major manufacturers, well, so far, they haven't been able to ramp back up as fast, and they might not be able to apply the same amount of pressure on regulators to get back up to full capacity. So we can make an educated guess that if someone like Pegatron doesn't have enough PCBs, their customers aren't gonna be receiving enough completed graphics cards anytime soon. The other issue is logistics. Chinese officials are apparently smoothing out the process of clearing drivers and dock workers to return to work, and it is getting better, but a lot of the transportation workers still haven't returned to work or they're in precincts where they're not allowed to travel to other regions. Now, to protect my source, I won't say what kind of product I'm talking about, but I did hear an anecdote about a couple thousand finished units of a large device sitting there ready to ship out with just two drivers to move them out. So we could be in a position where even if people are at the factory working and building things, there could be no way for us to get them. And while I've been focused mostly on China so far, this is not just a Chinese problem. Even with all the outsourcing last year due to tariff concerns, a lot of what was outsourced was sub-assembly or final assembly to Mexico, India, Vietnam, or what have you. But the thing is, all the sub-components still need to come out of China. For assembly. So it's gonna hit everyone, even if it's indirectly. Where we really run into trouble is if it starts to affect others directly as well. Samsung just closed one of their phone factories in Korea last weekend due to a confirmed infection of one of the workers there. AnonTech has the most recent hard numbers I could find. And as of the midpoint of last year, South Korea, including Samsung, who holds the lion's share of the market, was still producing about 70% of the world's DRAM. So that's the memory for your PC, phone, and game console. And about half of the world's 3D NAND. So those are the storage chips in your SSDs, your phones, and yes, game consoles. Now nothing has happened on the game console front yet, but because of that last point, SSDs in particular could be in a very vulnerable position. NAND was already expected to jump this year after enjoying a period of never before seen affordability. And there are multiple factors that speculators could have expected to contribute to this. Client devices have almost entirely abandoned mechanical drives, except on the very low end. Data centers are using more SSDs than ever before to improve performance in highly virtualized deployments or IO intensive workloads. And both Sony and Microsoft are going to be shipping their next generation game consoles in holiday 2020 with SSDs rather than hard drives for the first time. By the way, total aside, console gamers, welcome to 2010. It's awesome, you're gonna like it. Back on topic though, the best case scenario for all of this is that the candidate vaccine that's scheduled to begin human trials at the end of April will be fast and cheap to manufacture and 100% safe and effective. Or even that it won't be necessary because hotter weather will stop the spread. And maybe in a few years time, we'll be looking back at this as a disproportionate amount of media coverage over a particularly nasty strain of the flu. But if it does not play out like that, there's no clear end in sight. This example of inventory hoarding and price increases is actually not from the tech industry, but rather from speaking with a buddy of mine who runs a local gym. Pricing for bulk purchases of badminton shuttles or birdies of all things is skyrocketing right now. And that assumes that you can even find any to buy. Even lttstore.com has been affected by the way. Many of our China source items are out of stock. Now, back when the Thailand floods knocked out an estimated 30% of the hard drive industry's manufacturing capacity in 2011, I actually still remember this same kind of hoarding behavior that I saw from my buddy at the badminton facility who's just buying every shuttle he can find. I remember getting this memo from the president of the company telling everyone to go and buy, like literally go get in their cars and buy as many cheap external hard drives which sometimes trail the bare drives in terms of pricing fluctuations as we were allowed to from local big box stores so that we could strip the enclosures off of them and then sell them in our systems or to bare drive customers. Like if it stretches on for too long guys, even the used market will be affected. When the pricing of brand new hard drives went up 50% from the manufacturer, retailers added an additional markup because they couldn't get enough supply. And the thing is the pricing of used hardware tends to follow the trend set by new hardware minus some expected discount for the uncertainty of not having a warranty. So in summary, if you're waiting for some new or upcoming product like Intel's 10th gen desktop chips or Nvidia's upcoming 3000 series GPUs, there is nothing that you can do for now other than hope that they don't get delayed too much. But if you were holding off on pulling the trigger on something that's already available today, I would do it today rather than tomorrow. I'm not here to debate the measures that are being put in place or the validity of the ongoing health concerns. I'm just here to point at the events that arise from these concerns and how they could affect tech enthusiasts. If you're looking for a recommendation for a good system by the way, you can check out one of our recent build guides. The $900 Ryzen gaming build and our Intel Core i7 first person view gaming build are both great starting points. You know what else is a great starting point? This message from our sponsor, Massdrop. The Massdrop and Sennheiser PC 37X gaming headset features angled drivers and an open back design for great stereo imaging and locational accuracy. The drivers come from the same family as the HD598 and HD600 series headphones. So they sound great and they come with a noise canceling microphone. They've sold over 40,000 units of this puppy and new users who sign up for the website, so that's drop.com, we're gonna have it linked below, are gonna get $20 off a purchase of $50 or more. So go check it out. So thanks for watching guys. Hope you enjoyed this video. It's a little different from our usual style, but hey, leave a comment. Let me know what you think, all right?