Calm before the storm in South Africa
Syntech CEO Craig Nowitz said that South Africa has a small window to prepare for a new wave of computer hardware supply shocks, which will lead to rapid, sudden price increases.
Nowitz recently returned from visits to factories in China and trade shows in Hong Kong, where he said he saw the impact of memory and SSD shortages firsthand.
While the impact of AI demand on memory, SSD, CPU, and GPU prices was well documented, Nowitz said the coming storm will be much worse than many have prepared for.
“What I saw upstream confirms what we’ve been warning about: the memory and SSD crisis is real, but it’s broader and faster-moving than many in the channel expect,” Nowitz said.
“At factories that make PC components such as cases, coolers and power supplies, new orders are down 40–50% in some instances.”
Separately, manufacturers of tablets and notebooks reported large reductions in new orders, with up to 30% declines in some cases.
“These are distinct trends that together point to a broad demand contraction across multiple product lines,” he said.
“Chinese manufacturers are also facing material and labour cost increases, and the dollar weakness of the past 15 months has squeezed margins.”
Nowitz said factories were implementing price increases of 10–20% across all manufactured items in response to the market disruption.
“Automation has reduced labour costs in many plants, but it hasn’t offset the combined effect of falling orders and higher input costs,” he said.
“Tariff shifts and trade realignments have further strained suppliers that relied heavily on U.S. markets.”
Regarding the memory market, Nowitz said he saw two dynamics playing out: hoarded stock was depleting, and open-market trading would not sustain resellers for the duration of the supply disruption.
“System integrators and manufacturers have been holding inventory, reducing visible supply in the channel. That hoarded stock is now being consumed,” he said.
Nowitz said a lot of memory was changing hands on the open market, and that Syntech sourced memory that way for prices lower than direct vendor quotes. However, the supply was finite.
“Once open‑market inventory dries up, the market will feel the full force of manufacturer pricing,” he predicted.
“From what I observed, memory manufacturers are moving prices beyond what many consumers will accept, and the channel will face painful choices.”
SSDs, CPUs, and cascading effects
While memory price increases were visible sooner, Nowitz said SSD pricing jumped sharply over the last quarter and caught many in South Africa’s IT channel off guard.
“There simply wasn’t time to stock up. Given current wafer economics and NAND allocation priorities, SSD availability and pricing are likely to become a bigger problem than memory — and faster.”
He also warned that the component squeeze became broader, with the impact cascading to CPUs and graphics cards.
“Major shortages are already here with Intel CPUs, and price increases have been implemented with more expected as production shifts to higher margin segments,” said Nowitz.
With AMD chips, desktop CPU availability is constrained as semiconductor fabrication plants prioritise server-grade processors to meet data centre and AI demand.
Regarding graphics processing units (GPUs), Nowitz said prices have already risen, in part because DRAM is a significant cost input for modern graphics cards.
“A slowdown in new sales in some overseas markets has tempered GPU price spikes so far. South Africa has not yet experienced the same extreme price moves seen internationally,” he said.
“Our volumes are small relative to global markets, and allocations have been easier to secure — for now. But that buffer will not last if upstream trends continue.”
Advice for buyers
Nowitz said government and business-to-business (B2B) buyers will likely feel the pinch sooner as their orders require larger allocations.
“When upstream supply tightens, these quantities will be difficult to find.” He also warned that long-term supplier commitments are no longer a reliable option in this market.
“The current environment has made long-term guarantees effectively impossible,” said Nowitz.
“Consumer retail channels may see price rises later, but when they arrive, they will be sharp, especially for SSDs and higher-end memory kits.”
Nowitz said they were taking steps to protect their partners and customers, including securing allocations, open market sourcing, forecasting and analytics, diversification, and transparent communication.
For channel partners, he advised that organisations should plan inventory proactively, diversify SKUs and services, and source locally where possible.
“South Africa still has opportunities to find deals and older priced stock within the local market because of longer transit lead times from overseas,” he said.
“Resellers should actively hunt for these opportunities as they can provide short-term relief.”
He also said channel partners should prepare for sharper B2B impacts. Large deals will be affected sooner, and lead‑time risk should be modelled into bids.
“The upstream signals I saw in Hong Kong and China are clear: we’re not just in a cyclical blip,” said Nowitz.
“We’re in a period of structural change driven by AI demand, allocation shifts, and rising manufacturing costs. South Africa still has a window — but that window is closing.”
Nowitz said the next few months will be critical for the channel, with those who act early and strategically best positioned to weather the storm.
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