We have news from Cisco and Mitel (ShoreTel), that hardware costs will be increasing by 25% as of January 1, 2019. With the end of the year approaching fast – we recommend you review any initiatives involving hardware purchases before these increases go into effect. Although we have only received notifications from Mitel and Cisco, there is no reason to assume other vendors will not follow suit.

What will most affect customers are increases in the components listed below, which could raise the production costs of the products in which they reside.

Corporate components include:

  • ADP magnetic disk drive storage units and parts
  • GPUs
  • Magnetic or optical readers; machines for transcribing data on data media in coded form and machines for processing such data
  • Semiconductor media, “smart cards”
  • Digital cameras and video camera recorders
  • Video monitors, including flat panel screen assemblies and video projectors
  • Indicator panels using both LCDs or LEDs
  • LEDs for backlighting of LCDs
  • Parts of flat panel displays

Data center components include:

  • Power and energy storage:
  • Power supplies suitable for physical incorporation into automatic data processing machines
  • Power supplies for automatic data processing (ADP) machines or units
  • Static converters (for example, rectifiers) for telecommunication apparatus
  • Other inductors for power supplies for ADP machines… or for telecommunication apparatus
  • Printed circuit assemblies of power supplies for automatic data processing machines
  • Nickeliron storage batteries
  • Ignition magnetos, magnetodynamos and magnetic flywheels
  • Generators nesoi, of a kind used in conjunction with sparkignition or compressionignition internalcombustion engines

Servers and storage:

  • “Processing units” [defined as servers by trade body TechNet]
  • ADP magnetic disk drive storage units, disk dia. ov 21 cm, w/o readwrite unit; readwrite units; all not entered with the rest of a system
  • ADP magnetic disk drive storage units, disk dia. ov 21 cm: for incorp. into ADP machines or units, not entered with the rest of a system
  • ADP magnetic disk drive storage units, disk dia. n/ov 21 cm, nesoi, not entered with the rest of a system
  • Control or adapter units for automatic data processing machines not entered with rest of a system
  • Unit suitable for physical incorporation into automatic data processing machine or unit thereof, not entered with the rest of a system, nesoi
  • Other units of automatic data processing machines, not entered with the rest of a system, nesoi
  • Magnetic or optical readers, nesoi; machines for transcribing data on data media in coded form and machines for processing such data, nesoi
  • Recorded optical media, for reproducing representations of instructions, data, sound, & image, recorded machine readable binary form, for ADP

Semiconductors:

  • Silicon containing by weight not less than 99.99 percent of silicon
  • Quartz reactor tubes and holders designed for insertion into diffusion and oxidation furnaces for semiconductor wafer production, nesoi
  • Gold and other precious metals

Misc:

  • Lightning arrestors, voltage limiters and surge suppressors, for a voltage exceeding 1,000 V
  • Insulated electric conductors nesoi, used for telecommunications, for a voltage not exceeding 1,000 V, fitted with connectors
  • Machines for the reception, conversion, and transmission or regeneration of voice, images, or other data, including switching and routing apparatus
  • Printed circuit assemblies [CTA estimates this tariff could reduce in their the purchaser spending power of affected companies on the order of $900 million (10 percent tariff) to $1.8 billion (25 percent tariff)]
  • Coaxial cables
  • Other apparatus for transmission or reception of voice, images, or other data, including for communication in a wired or wireless network

If you’re interested here is a complete list:  https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List_09.17.18.pdf

There are two factors in tariff-related costs:

1) what the product is

2) where it is manufactured

The diversity of today’s global supply chain makes it difficult to pinpoint which products and OEMs are using affected components built in qualifying countries. But, it’s safe to say that the production costs of every major IT hardware OEM will be affected in some way.

We are working with hardware vendors to understand how these changing market conditions will affect the cost of doing business going forward. Since we review our customers’ contracts, please note if you are currently undergoing a hardware refresh or have future budget initiatives be sure to contact your account team to receive the latest news, pricing, and availability of the technologies you are looking to deploy.