Notebook Component Makers Reportedly Paying Cloud Costs


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As the tablet market continues to grow, notebook manufacturers have begun to feel the pinch. Notebook shipments are down worldwide, and margins on the devices are becoming very thin. To shore up profits it now appears that some notebook manufacturers are pushing off some costs to their component manufacturers.

DigiTimes today reported that "some" notebook manufacturers have pushed off costs for their cloud computing initiatives onto component manufacturers. Even component suppliers that have nothing to do with the cloud computing initiatives are reportedly being pressured into paying into "cost sharing programs" for cloud computing services. The report's unnamed "sources from the upstream supply chain" stated that component manufacturers are actually paying up, fearful of losing contracts with major notebook manufacturers.

The report's sources stated that they are "concerned" that even more notebook manufacturers could begin demanding that suppliers begin paying for associated costs, passing their decreased margins down the supply chain.

Even if component manufacturers end up paying this ransom, it might not mean they are protected from dropping sales. According to DigiTimes, both Samsung and Lenovo - two of the largest notebook manufacturers in the world - are set to drastically cut back on their component orders during 2014, opting instead to manufacture components in their own facilities. With labor costs now at least double what they were one decade ago, other notebook manufacturers will also be looking to cut orders as shipments are predicted to continue declining.