Consumer Electronics Price Increases Loom as Chip Shortage Continues

Ally Feiam By Ally Feiam | 16 Sep 2021

Electronics retail prices are expected to skyrocket as global chip shortages cause crises among businesses. Intensified by the pandemic, there has been a major chip shortage for electronics, such as phones, PCs, laptops and other devices. Experts predict that this issue could persist until 2023. 

This will be particularly hard for APAC retailers and manufacturers, as a large sum of the population remains working from home. This has led to an uptick in consumer electronic purchases.

“The crisis is expected to continue until 2023 due to longer lead times and strained supply lines in the semiconductor industry,” said Suresh Sunkara, the Retail Analyst at GlobalData. “With advanced technology and 5G services, the demand for consumer electronics, PCs, laptops and related devices is expected to remain high over the next few years. In such a situation, retailers are finding it difficult to absorb skyrocketing demand, and the burden is passed on to the consumers.”

This was exacerbated by ‘stay at home’ orders, which drove consumer electronic purchases through the roof. In fact, Power Retail data indicates that 72 percent of Australian consumers prefer to buy consumer electronics during sales events. With the holiday season hot on our heels, this could spell problems for retailers.

“Given the massive shift to online and ‘work from home’ culture, it is certain that consumers will spend on these items,” continued Sankara. “However, the financial uncertainty might force them to trade down on their preferred purchases. While this will lead to a slight increase in the overall electricals’ sales value, high price inflation will have its impact on both consumers and retailers.”

What’s more, despite the stress of chip shortage easing slightly in August this year, the relief won’t last long. Prices of said consumer electronics have increased recently, in an effort to balance out the supply chain issues. These issues are likely to resolve themselves within the next two years, GlobalData suggests.

“As most of the manufacturing plants are based in Asia due to their geographical advantage, local lockdowns and labour shortages have affected the manufacturing at chip plants, especially in Malaysia and Thailand,” Sankara said. “GlobalData expects the industry to take at least two years to recover and adapt to the current demand. Hence the price rises are expected to persist until 2023.”

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