OEM Server Firm Struggling to Manage Myriad Tariff-Based Price Hikes, Says President

Custom OEM server hardware company MBX Systems sent a letter to its independent software vendor, OEM and cloud service customers this month, alerting them about upcoming price increases resulting from tariff-driven price hikes by over 30 of its component suppliers, President Chris Tucker told us. The Illinois-based company integrates motherboards, chassis, power supplies, cables, disk drives, central processing units and memory, most coming from China, said Tucker, describing a “bit-by-bit” approach to price increases by individual vendors resulting from the 10 percent Trade Act Section 301 tariffs imposed by the Trump Administration Sept. 24. MBX’s price increase for finished products is “slight” at this point because “10 percent on a motherboard may be a small percentage of the overall product cost so maybe we’re seeing a single-digit increase,” he said. Suppliers have had different responses to tariffs, some taking a wait-and-see approach and others “running through inventory"; by January, Tucker expects “one quick bump from everybody when people really feel it.” MBX has spent a “huge amount of resources” managing tariffs as it receives individual price adjustments, Tucker said. “We’re not slapping 10 percent across the board and saying, ‘that’s the tariffs,’” but the company has expended hundreds of hours across the organization managing the supply chain, marketing and educating account managers how to inform customers of price changes, he said. “That’s labor we could be using in other areas to expand the business; it’s a lost opportunity for us.” Third-party hardware partners listed on the MBX website include AMD, Broadcom, Dell, EMC, HP, Intel, NVidia, Microsoft, Red Hat and Samsung.