DHS Sanctions on Ninestar Threaten US Toner Supply; Lexmark Among Affected Parties
Forced Labor Allegations Disrupt Importation of Key Printer Component; Local Toner Providers and Major Suppliers Like Lexmark Brace for Potential Supply Chain Crisis
As you know, the U.S. Department of Homeland Security (DHS) announced on June 9, 2023, that it was restricting the importation of goods produced by Ninestar Corporation and eight of its subsidiaries due to its alleged involvement in forced labor practices. “This decision was part of the enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) which prohibits goods from being imported into the United States that are either produced in Xinjiang, or by entities identified on the UFLPA Entity List unless the importer can prove that the goods were not produced with forced labor.”
In a letter to its customers and partners on June 12, Lexmark responded, “On June 9, the U.S. Department of Homeland Security (OHS) announced actions to restrict goods produced by Ninestar Corp., one of Lexmark’s many suppliers, from entering the United States. Lexmark learned about this action when it was announced.”
Perhaps the bigger impact will be on the domestic toner suppliers. Especially those who sell non-OEM cartridges.
“We have taken immediate action to stop shipments from Ninestar and its affected subsidiaries to the U.S. and are replacing them as a supplier.”Melanie Hudson, senior vice president and chief commercial officer, Lexmark
Ninestar is the owner of APEX/Geehy, a company that dominates around 60-70% of the aftermarket cartridge chip market, and also holds a substantial 62% stake in Lexmark.
It has been reported that APEX/Greehy has been instrumental in supplying chips for the latest HP JetIntelligence compatible printer supplies over the past five years, and is reported to provide a majority of the chips used in Lexmark compatibles produced within the last seven years.
Given the ongoing impounding of incoming stock replenishment containers, it is likely that aftermarket toner providers will face a supply shortage. As Ninestar serves as the exclusive manufacturer of chips for certain popular models, the halt in new inventory arrivals to the US seems inevitable, particularly for HP SKUs for models produced in the last five years.
The challenge in finding a solution is compounded by the fact that there have been no new entrants in the chip technology sector over the past year. For remanufacturers, the most plausible workaround would involve supplying a used chip for the cartridge. However, this comes with the limitation of not being able to report page volumes or toner levels, making it a not a viable solution for Managed Print Service (MPS) providers.
Nevertheless, as suppliers transition to our other partners, there will be supply shortages. The shift in supply chains could require a period of 60-90 days for new inventory to be constructed and shipped.
– Greg Walters, Head Writer