My neighbor can't get the components he wants for the gaming desktop he's building.
Neither can Apple.
Literally every participant in the consumer electronics landscape – from the biggest to the tiniest – is being squeezed by component shortages, production slowdowns, logistical snaggles and supply chain reprioritizations.
At a time when build plans are constrained, we have tried to answer the question of how devices will be prioritized in terms of components, production and logistics. Our risk assessment considers factors such as key components, market size and consolidation, manufacturing location, shipping cost and more. We will update the assessment as the situation evolves.
For now, the problems facing the CE market include
- Congested ports and unreliable freight delivery, especially in the U.S.;
- Deep ocean container spot prices up as much as 1,000% year-on-year in 2021;
- High fuel costs and tight labor supply hampering trucking and distribution;
- A growing electric vehicle market that is gobbling up resources; and,
- Production stoppages due to COVID-19 and energy blackouts.
These problems do not affect all devices equally. Small, high-margin devices will fare better overall, and higher-end models within each device category will be prioritized.
Nor will all brands be affected equally. Those with the bargaining power to secure components and transport routes may, in fact, benefit from this moment, at least in terms of market share.
But even at the highest ends of the market, this is a time of tradeoffs. Apple prioritized iPhone 13 over iPad when facing component shortages. Sony chose to air freight PS5 consoles to the UK, rather than miss retail opportunities. Nintendo simply reduced its production target for the Switch.
If these companies, with their deep resources, cannot avoid disruptions, then smaller market players are facing a crisis of another magnitude.
What happens to dancing cactus toys and cheap drones when chip makers shift production to high-margin silicon? What happens to smart Christmas lights when there is a shortage of radio frequency chips and when the timely arrival of cargo is not guaranteed? And what happens to device categories in their sunset years like Blu-ray players and compact digital cameras?
At lowest-end of the market, this may be a moment of reckoning – and possibly the start of a mass extinction event. The era of cheap Fast Fashion electronics may be ending, while sunset devices such as Blu-ray players may soon see a final curtain.
More information on the impact of supply chain shortages on consumer devices is available in Omdia's Consumer Electronics Viewpoint Service.
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