Global chip shortage forces consumers to pay higher prices: Report

*As the global price of computer chips is increasing, so are manufacturers passing those costs to consumers of automobiles and electronic devices

Gbenga Kayode | ConsumerConnect

The outbreak of the Coronavirus (COVID-19) pandemic, and resulting lockdowns have led to a big increase in spending on devices in economies around the world recently.

ConsumerConnect gathered subsequently, the computer chip shortage induced by the Coronavirus is beginning to be felt by consumers.

Some electronic devices and automobiles have already gone up in prices, and more price increases could be coming in the future, agency report said.

Chip shortage hits the automobile manufacturing industry   Photo: Getty Images

The disruptive pandemic and subsequent lockdowns in countries were said to have led to a big increase in spending, especially on devices.

Business meetings began being conducted on Zoom, and children needed laptops and tablets to attend school remotely, a report stated.

The surge in demand drew down chip inventories, and semiconductor companies have struggled to catch up as well.

Automobile market

How have car buyers felt the pain thus far? Consumers first felt the impact of the chip shortage when they went car shopping.

Automakers cancelled chip orders early in the pandemic when they expected a lengthy sales decline.

Instead, car sales began to rise as people who once relied on ridesharing and public transit realised they needed a vehicle.

This publication had reported that several leading automobile manufacturers found they could not get enough chips because electronics companies were ahead of them in line and chip-making requires a long lead time.

So, there were fewer new cars on dealer lots with the reported improvisation for some of the hitherto common features of some new vehicles.

Report indicates that with more buyers than cars now, dealers have been in the driver’s seat.

They have not had to negotiate as much or provide incentives, resulting in consumers paying more for a new car than they might have before the pandemic, according to report.

Given a shortage of new cars from the stable of the manufacturers in recent times, consumers began snapping up late-model used cars.

Prices for used cars hit an all-time high at the beginning of May 2021, an increase that is at least indirectly attributed to the computer chip shortage.

Electronics prices go up

The shortage of computer chip is now raising the retail prices of some electronic devices in major markets around the world, reports The Wall Street Journal.

It was learnt that the price of computer chips is going up, and manufacturers are passing those costs on to consumers.

A case in point, according to report, is a popular laptop made by Taiwanese manufacturer ASUSTek Computer Incorporated.

The price of the laptop on Amazon was said to have increased by $50 June 2021, whereas in another example, an Hewlett Packard (HP) Chromebook price rose from $220 to $250 this month, a nearly 14% increase.

HP PC prices are up 8% year-over-year, and printer prices have risen by at least twice that.

Enrique Lores, Chief Executive Officer (CEO) of HP said that higher prices are the result of component shortages that may not end any time soon.

Chip scarcity has become an issue that other manufacturers face as well.

An industry analyst says consumers may not see across the board price increases, but they are likely to see fewer discounts between now and the end of this year.

That could be a good reason to pay attention to the two- and three-day sales promotions that Amazon, Walmart, Target, and some other big retailers are offering this week.

It could be the last chance for electronics bargains for a while, according to report.