Chip shortage to drive consumer electronics retail prices, says GlobalData

The global chip shortage will have a deep-rooted impact in the consumer electronics segment like that of the automotive industry. The crisis was intensified by the unexpected outbreak of COVID-19 in 2020, particularly in chip manufacturing APAC nations, and will have ramifications on consumer electronics’ retail sales over the next few years, says GlobalData, a leading data and analytics company.

COVID-19 has done its part in boosting the demand for consumer electronics such as laptops, PCs, smartphones, and other smart devices as majority of the population stayed at home and continued to work/study from remote locations. The crisis will push up the prices of these items as the manufacturers struggle to procure chips.

Suresh Sunkara, Retail Analyst at GlobalData, comments: “The crisis is expected to continue until 2023 due to longer lead times and strained supply lines in the semiconductor industry. 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.

“Given the massive shift to online and ‘work from home’ culture, it is certain that consumers will spend on these items. 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.”

The crisis seemed to ease during August 2021, but the situation is beginning to worsen. The prices of some established brands laptops and computers have increased and if the situation persists, other consumer electronics devices will also see higher prices.

Mr. Sunkara concludes: “The emergence of new variants of coronavirus along with the recurring waves of the pandemic has led to a spike in COVID-19 cases in Asia. As most of the manufacturing plants are based in Asia due to their geographical advantage, local lockdowns and labor shortages have affected the manufacturing at chip plants, especially in Malaysia and Thailand. 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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