LDN - Business

Tariff pain turns to gain: U.S. computer, toy stockpiles help meet virus rush

[April 01, 2020] By Paresh Dave

OAKLAND, California (Reuters) - As the coronavirus outbreak forced classes online, Boston Public Schools ordered 20,000 laptops and had them in hand in four days - an unusually fast turnaround made possible by a build-up of inventory prompted by the U.S.-China trade war.

Computer companies including Boston school vendor Acer Inc <2353.TW> ordered extra laptops for import in early December ahead of scheduled U.S. tariffs on products from China, where 90% of the world's laptops and monitors are made.

While the tariff plans have since been canceled as part of a "phase one" trade deal, the build is letting companies meet a surge in demand from U.S. students and workers stuck at home due to lockdowns, even as customers in Japan, India and Britain face weeks-long delays and "out of stock" signs.

"We're going to be able to fulfill everything for everybody" in the United States, said Richard Black, a vice president of marketing at Acer, which sold about as many laptops worldwide as Apple Inc <AAPL.O> last year.

"It turned out to be an excellent call to order early."

Other products sought after by families on lockdown, including toys and computer monitors, are also relatively plentiful in the United States. They too had been scheduled to fall under a 15% tariff starting last Dec. 15.

California-based MGA Entertainment, which sells Little Tikes backyard toys and LOL Surprise collectible dolls, in December placed an import order for 15% more than normal from China, or slightly under $10 million in goods, CEO Isaac Larian said.

It has been able to fulfill about 60% of U.S. demand as consumers seek ways to entertain their children at home.

Fulfillment rates are lower in Europe, where MGA did not bring in extra products, Larian said.

"It did work out a little but the supply chain is still disrupted majorly," he said.

The virus closed many factories in China for a month or more, delaying spring-time deliveries to warehouses globally.

The coronavirus originated in China last year and has since spread across 205 countries and territories. Globally it has infected more than 850,000 people and killed over 42,000, according to a Reuters tally.

[to top of second column]

A 4th grader at Cottage Lake Elementary tries to figure out assignment instructions on his laptop as he navigates the online learning system the Northshore School District will use for two weeks due to coronavirus concerns, at his home in Woodinville, Washington, U.S. March 11, 2020. Demand for laptops and monitors have surged in the U.S. as more people work and study from home. REUTERS/Lindsey Wasson/

DEMAND IS BUZZING

Some popular computer monitors now are out of stock even in the United States as a result of the work-from-home rush, said Linn Huang, an analyst at technology market tracker IDC.

On Amazon.com, merchants have raised prices on top-rated consumer laptops by $50 to $100, according to tracking on price comparison tool CamelCamelCamel.

However, businesses purchasing from commercial sellers have not seen price jumps, according to industry analysts.

Boston schools paid $5 million, or about the usual $250 each, for the 20,000 Chromebooks sent by Acer on two trucks each from warehouses in Los Angeles and Chicago.

"Now is not the time when dealing with children and education environments to try to jack up prices and have some short-term profitability," Acer's Black said.

Analysts expect laptop demand to slow if the global economy sputters further and widespread layoffs continue due to the impact of the virus.

But with many still tuning their work-from-home set-ups, demand is buzzing. Computer exports from South Korea surged 82% in March over last year.

Some computer makers are even weighing the expensive move of transporting devices by plane versus boat, said Jeff Lin, a Tapei-based researcher at Omdia.

The goal, he said, is to gain market share by being first to get devices in stock.

(Reporting by Paresh Dave, Editing by Jonathan Weber and Himani Sarkar)

Back to top