Current State of the Raw Material Market and Production Pressures

I. Price Pressures on Plastic Raw Materials
The modified plastics used for aroma diffuser housings and water tanks are closely tied to crude oil market trends, resulting in continuous price volatility.
While prices for standard general-purpose plastics have dipped slightly, supplies of high-quality PC and modified PP—materials essential for compatibility with essential oils and resistance to water and corrosion—remain tight, with prices steadily rising. We cannot use low-grade recycled materials to cut costs, as this would lead to post-sales issues such as leakage, unpleasant odors, and housing degradation; consequently, we are forced to bear the high cost of compliant raw materials over the long term.
II. Persistent Shortage of Chips and Electronic Components
With global wafer production capacity heavily diverted to the new energy and AI sectors, prices across the board—including main control chips for small appliances, atomization driver ICs, and Bluetooth/Wi-Fi modules—have risen by 10%–25%.
Lead times for components have extended by 2–3 months; we frequently face situations where housings are ready but chips are unavailable, forcing production lines to halt while awaiting parts, making it difficult to ensure stable order delivery. Even switching to domestic chips entails additional costs for debugging and testing.
III. Operational Challenges Stemming from Dual Raw Material Pressures
Sustained Cost Pressure
Price hikes in chips have completely negated the cost relief provided by the slight drop in general-purpose plastic prices, causing the total bill of materials (BOM) cost to climb steadily. Current production of orders signed earlier at fixed prices is resulting in losses due to this cost-price gap.
Heavy Capital Tie-up
To avoid stockouts, we must lock in chip orders in large quantities well in advance, tying up significant working capital in raw material inventory. Conversely, we cannot stockpile large quantities of specialized plastics due to market volatility and the risk of inventory devaluation, creating a procurement dilemma.
Inability to Cut Costs by Reducing Specifications
Simplifying circuits, removing smart features, or switching to cheaper materials would directly compromise product quality and damage our reputation in the end market. To uphold product quality, the factory is essentially absorbing all the increased costs itself.
Conclusion
The upstream supply chain is currently under significant strain. We are doing our utmost to maintain stable shipments and product quality, and we sincerely appreciate our customers’ understanding and patience.