The pandemic has wreaked havoc on the computer industry (amongst others) with all major computer suppliers being affected. The industry-wide component supply shortages and complicated logistics and shipping constraints are driving up prices of essential hardware, including CPUs, memory, display panels, graphics cards, LCDs, and various semiconductors are expected to persist through the year and contribute to computer costs rising, so you are going to pay more for that computer.
Due to numerous interruptions in the supply chain, there has been a limit on cost-efficient shipment accessibility with air freight being the only option and even that has been strained, complicating logistics. Normally, PC manufacturers, as well as suppliers only use air freight for their premium and latest products. There will also likely be additional challenges in the freight network as airplanes get filled up with vaccines absorbing much of the limited space available.
Additionally, costs are being driven up by sophisticated scalper bots that buy up the available new products at retail prices and reselling them at outrageous markups (also known as ‘scalping’). ‘Scalping’ is not new and has affected everything from event tickets to athletic shoes but estimates have indicated that scalper bot activity has tripled since March 2020 when supply lines were impeded with the onset of the pandemic.
Another factor really impacting the costs of the products includes the previous administration placing rather rigid restrictions on imports from China and the expiring tariff exclusions granted to those restrictions, forcing many companies to increase prices due to these tariffs which range from 7.5 to 25 percent.
Computer sales significantly surged this past year. Exceeding 302 million in 2020, a 13% increase from the year before and the most since 2014. Consumers are buying all ranges of computers from low-end entry-level systems to high-end gaming machines, driven by the need of entertaining and working from home and remote education.
While most conventional retailers cannot keep the products in stock, online marketplaces, like eBay and Amazon are loaded with computers and parts selling for upwards of twice their intended price (thanks to the previously mentioned scalper bots).
RESOLVING THE ISSUES
President Joe Biden signed an executive order in February to begin a 100-day review of supply chains across four key industries, including semiconductors. He also sought $37 billion in funding to enhance semiconductor manufacturing in the U.S. Measures aimed at boosting chip manufacturing in the U.S. were included in this year’s National Defense Authorization Act.
With the root causes of the hardware supply concerns being addressed as we roll through 2021, we can confidently say that better days are coming. The bottom line… The demand greatly exceeds supply and will continue for the foreseeable future so plan your purchases ahead of time and shop wisely. The current pricing situation is not ideal, but you can still grab a decent deal if you can wait a few extra weeks for your products to arrive.
Every day, your business depends on information technology (IT) to operate. Thank you for letting us be there for you. Braver Technology Solutions | WeMakeITWork@BraverTechnology.com
Boston 617.315.8515 | Taunton 508.824.2260 | Providence 401.484.7900