Caught With Their Chips Down

A worldwide shortage of key components is squeezing bottom lines

Hewlett-Packard Co. knows what a close call feels like. Last December, the company came within days of having to shut down a critical line producing computer servers--high-margin products that sell for $2,000 and up. The reason: HP had nearly run out of capacitors--humble components that normally cost about 2 cents apiece. HP's buyers scrambled and found 100,000 of the parts on the Internet. They were selling at a hefty premium, "but it was worth it," says Don Schmickrath, Hewlett-Packard's vice-president for manufacturing. "This is not a 2 cents problem."

To continue reading this article you must be a Bloomberg Professional Service Subscriber.