Taiwan-based notebook makers are currently facing a dilemma over their inventory preparations as their downstream partners have started to place short-term orders to avoid the risk from channel inventory buildups and exchange rate fluctuations, while the makers are concerned that labor shortages during the Lunar New Year in the first quarter of 2011 could cause serious supply issues and so plan to increase their component inventory levels in the fourth quarter, according to sources from component players.

Because most brand vendors are not concerned about their manufacturing partners' labor shortages and are shortening their order placement terms to reduce their risk, most notebook makers are facing great pressure over their inventory management, the sources pointed out.

In addition, although the labor shortages are typically resolved in May, when students graduate, the IT industry is no longer the priority choice for new graduates and so notebook makers are concerned that labor shortages in China will only get worse in the future.