Gadget gifts can get expensive this holiday season as the supply chain plays the role of the Grinch


A man uses his old iPhone to photograph his new iPhone X at an Apple store in New York, the United States on November 3, 2017. REUTERS / Lucas Jackson

Nov 10 (Reuters) – Buyers could envision an expensive Christmas as supply chain issues force companies to manufacture and deliver their latest higher-margin electronic gadgets to market faster, leaving fewer options cheaper to put under the tree.

The best electronics brands are using their best resources to deal with a chip shortage that has reduced production of goods in all price ranges due to logistics issues, a tight labor market, and factories closed due to pandemic lockdowns in parts of Asia.

Various websites show that cheaper products have longer wait times for delivery, while big ticket items are available earlier.

“If vendors choose which device models they want to manufacture when they have limited access to chips, they will generally go up-market because they can better maximize their profits,” said Filomena Iovino, analyst at ABI Research.

Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) have hoisted bright red banners on their websites telling online shoppers to have their holiday gifts delivered ASAP on some of their newest products and the most expensive.

An 11-inch $ 800 iPad Pro can ship as early as November 17, but the cheaper, newer entry-level iPad at $ 330 could take nearly a month or more.

Likewise, a $ 1,759 Hermes Apple Watch 7 will hit customers in early December, but the $ 400 Apple Watch will take longer.

Samsung will also ship the latest Galaxy Z Fold at $ 1,900 a week earlier than the $ 1,200 S21 Ultra. Both are equipped with the latest 5G chips.

Qualcomm Inc (QCOM.O), which makes high-end 5G-compatible chips for Apple and many leading Android phones, said its customers are focusing on high-end and high-end devices.

“Since there are fewer cheaper phones, the cheaper phones will not be as reduced as we normally see,” said Runar Bjørhovde, analyst at research firm Canalys.

While global smartphone shipments declined due to component shortages in the third quarter, strong shipments of mid-to-high-end smartphones generated record third-quarter revenue of more than $ 100 billion, according to Q3. Counterpoint.

Smartphones are expected to cost an average of $ 410 this holiday quarter, up from $ 376 the previous quarter and $ 395 last year. Average laptop selling prices are expected to jump 8% to $ 830 for the holiday quarter, according to IDC.

GoPro Inc (GPRO.O), which moved production in the last quarter to focus on high-margin action cameras, said earlier this month that consumers were buying high-end cameras at over 300 $.

Even laptop makers, which rely on factories in Asia for the majority of their components, have shifted production from the cheaper 11 “Chromebooks to higher-end 14” and 15 “variants, the analyst said. ‘IDC Bryan Ma.

“It works in an environment where supply is limited, because consumers have no other choice… So when supply eventually catches up with demand, manufacturers can devote more production to lower end products. to attract more price-sensitive users, ”says mom.

Reporting by Nivedita Balu and Tiyashi Datta in Bengaluru; Edited by Bernard Orr

Our Standards: Thomson Reuters Trust Principles.


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