Major changes in the financial structure of the Eurozone could have profound effects in the electronics supply chain.
While French and German leaders agreed on measures to ensure ‘debt reduction’ in countries affected by the global economic situation, there are concerns that various supply chains will be hit hard.
An agreement with 23 of the 27 Eurozone countries, which leaves British PM David Cameron out in the cold, will see tighter restriction on countries which have fallen into massive debts such as Greece and Italy. However, the move has not exactly placated fears of the knife-edge situation, with many worrying Eurogeddon is looming on the horizon.
According to a Reuters straw poll of economists they keep locked in a cupboard for such occasions, there was little optimism that the move will steady the mounting debt crisis.
Only 33 out of 57 think the Eurozone will survive in its current form. And 38 of these had severe doubts over what effect the Sarkozy-Merkel led agreement will have to reduce debts anyway. American economists have been writing off the Eurozone for some time now.
All of this could leave the European supply chain in a very precarious position, with the lack of demand in various channels already being felt. Global downturn in the panel industry has led analysts to tell TechEye that even market leaders are operating at a loss. Weak demand is in the semiconductor industry already with DRAM virtually on its knees.
While these industries are tied into the larger global picture, the effect of a swift drop-off in demand could reverberate quickly back up the supply chain, just as rapidly as Europe felt the force of price hikes in the wake of the ongoing HDD supply problems.
One industry source said that there are almost certainly problems ahead, with little indication of how the situation can be resolved in the future.
“Demand and supply will both be affected,” TechEye heard. “The supply chain is a very fragile thing, as Thailand and earlier this year the Tsunami in Japan have taught us.
“Already, I understand, Ireland is preparing a re-issue of Punts instead of Euro, just in case.
“Currency fluctuations will make all the difference between profit and loss, particularly for distributors in the Netherlands, where margins are already very, very slim.”