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EKWB has laid off 25% of its total workforce, blames low sales

Reports state premium DIY cooling business has cut a quarter of its workforce

Updated: Apr 22, 2022 1:52 pm
EKWB has laid off 25% of its total workforce, blames low sales

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EK Water Blocks, one of the most prominent DIY watercooling companies in the industry have laid off 25% of its workforce, according to a report from TechPowerUp. The company claims to have laid off around a quarter of its staff, amounting to around 60 people in total in their home country of Slovenia. EK’s products are often seen as a premium, niche item for diehard DIY watercooling fanatics, and the report suggests that EK has seen around a 20% drop in sales in October 2021. This news heralds that the latest numbers could potentially appear to be even worse, though we have no hard numbers to go on at the moment. The business has claimed that there are several factors that make up this decision, including the COVID-19 pandemic and low sales.

While many companies have seen ample profits from the global pandemic, there’s currently a concoction of global issues stirring to make consumer spending even tighter, and usually, the first thing to go are the luxuries. According to the latest reports from Fortune magazine, a ‘worldwide recession’ is imminent, which could spell trouble for EK Water Blocks, or any other company that makes a non-essential, luxury items such as bespoke watercooling products for DIY PC builders. We’ve even seen warnings from TSMC that demand for consumer chips is cooling down, and this report only goes further to reaffirm the statement that the ripple effects of this loss of demand are rippling throughout the industry, even if some companies such as ASUS are still enjoying high profits.

There are additional mentions in the report that the current conflict in Ukraine could be impacting supplies of manufacturing materials for the business.

EK issues a statement

Courtesy of TechPowerUp, who broke the news, EK has issued an official statement where they observed that ‘consumer spending was starting to decline’ in addition to a reduction in their proposed sales forecasts, which fell even further short due to the ongoing conflict in Ukraine.

‘EK is taking early precautions to streamline our operations in Slovenia. Regretfully this involved a reduction in the number of employees by 25%.’ Though EK experienced rapid growth in the years prior, this cooldown period in consumer spending means that EK had to take measures to protect the business with regards to lowering their own overheads. According to EK ‘The reduction of employees was done almost proportionally in every department (with focus on future growth), R&D is our core domain and most of outstanding innovations are coming from this core, so it remains an integral part of EK’

This appears to be a more precautionary measure, than a herald of impending disaster for the business, as it could be seen that the business might be in a bit more trouble. However, EK needs to stay afloat, and in order to survive, they are looking to additional ways to grwot their business globally. While their product offering appears meager to most companies aside from their focus on bespoke watercooling products. You have to imagine that these lovingly-crafted quality products don’t exactly fly off of the shelves, so the business may refocus to be slightly more consumer-facing than only for the hardcore DIY watercooling nerds out there.

What does this mean for the industry?

This isn’t a good sign for companies who are in the niche, high-end segments of DIY PC building. While other niches such as custom keyboards continue to gain popularity amongst even casual audiences, the custom watercooling segment may have reached market saturation among its audience. To fully custom-loop a PC isn’t exactly a cheap undertaking, and when companies are continuing to innovate in the cooling space with AIOs from all of the biggest brands in the game, it can be easy to see how quickly that EK might get left behind find the dust of competitors who are already scaled to the point of having their products in most brick and mortar stores and used in millions of builds across the globe.

With less consumer spending power in many countries across the globe, it’s possible that we might see further reports of companies restructuring on the fringes of the industry, but we can only hope to see that these companies manage to survive in a saturated market that is only growing even more cutthroat than ever in the response to the current global situation. Additionally, while EK may have enjoyed high growth over the past few years, they also have to consider that we should see market demands and conditions begin to normalize as the restrictions begin to ease in many parts across the globe.

How the chips fall from there is like attempting to predict the weather; it’s going to be incredibly difficult to say where the industry is headed, but if TSMCs warnings ring true as the world potentially slips into another recession, it could spell bad news for nonessential luxury tech brands, though their products might always be desirable, they might not be exactly the most affordable for consumers who are seeking to tighten their pockets.

Could the company be greasing the wheels for acquisition?

However, we also need to consider if EK is seeking to be purchased, as a company that has less overheads will look more attractive to any prospective buyers. We have additionally seen companies such as Corsair already absorb niche manufacturers such as Scuf in order to expand their own remit of products, and EK would not look too strange in Corsair’s portfolio, too. It’s a luxury product, for hardcore enthusiasts and the price should reflect the quality of the product. Something that Corsair already does well is their own line of DIY watercooling gear, but if they really wanted to step up their game, they could potentially purchase EK to bring the premium factor to what appears to be a rather stagnant line of their DIY PC lineup.

This is all speculation of course, and there is currently no indication that EK is intending to sell, nor is Corsair looking to purchase them.


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