Can distributors find a way to deal with RAMgeddon?

According to Ananth Lazarus, Managing Director of GTDC APJ, while the RAM shortage will be a painful challenge, distributors and vendors will rise to the occasion to deal with the situation as they have for previous challenges in the industry.

With the memory shortage problem resulting in vendors increasing their pricing and even removing incentives for some deals, distributors are now having to carefully navigate the situation to ensure they remain capable of not just meeting customer needs but also maintain their profits.

According to reports, pricing for some memory components could increase by up to 400%, a hike that will surely put a huge dent on expansion plans for some organizations. While the situation is expected to improve by 2028, the reality is businesses may not be able to hold on to their AI growth plans that long.

One vendor informed CRN Asia that as AI adoption accelerates, supply shortages and higher component costs are a natural consequence of rising demand. Interestingly, the vendor mentioned that the current situation is not new for the industry. The vendor believes that they are better positioned and more flexible than peers to manage effectively due to their scale, operational excellence, and multisource strategy that ensures reliable supply and competitive costs – staying agile in the market while protecting margins and profitability.

“Expect some pressure on volume/units for this year but fully expect we can continue to grow revenue and maintain profitability,” the vendor stated.

But what does this mean for distributors? Do they scale back on certain products? Do they absorb some of the costs or push it all to their partners and customers?

For Ananth Lazarus, Managing Director at Global Tech Distribution Council (GTDC) APJ, whenever the tech industry had to deal with supply chain issues, be it shortages from natural disasters, geopolitics or even during the pandemic, distributors have worked with vendors to overcome it to the best of their ability.

“I don't see the difference here. Is it painful? Absolutely. Our price is going to go up, that's what the market is talking about. But I think distributors working with multiple vendors will look to satisfy their customers. So, the role of orchestration and best fit will still continue. Is it a challenge? Absolutely. Let's acknowledge that it is painful and it is going to disrupt the supply chain, but this is not the first time,” said Lazarus.

Lazarus also explained that while it remains to be seen how long this situation will last, it also depends on the horizon that distributors are looking at. Put simply, there is no short-term solution for this issue, and distributors will find themselves adopting the situation based on the market needs.

“It is something of concern and it's something where distributors and vendors have together risen to the occasion previously to try to solve as much as they can,” he said.