Gadget gifts can get expensive during the holiday season as the supply chain plays The Grinch

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A man uses his old iPhone to photograph his new iPhone X at an Apple Store in New York, USA, November 3, 2017. (REUTERS)

Shoppers may be looking forward to an expensive Christmas as supply chain snafu force companies to produce and deliver their latest high-margin electronic gadgets to market faster, leaving fewer cheaper options to put under the tree.

Top electronics brands are using their best resources to address a chip shortage that has reduced production of goods across all price ranges due to logistical problems, a tight labor market and closed factories due to pandemic lockdowns in some parts of Asia.

Various websites show that cheaper products have longer waiting times for delivery, while expensive items are available sooner.

“If vendors choose which device models they want to produce when they have limited access to the chips, they will generally go to the higher end, as they can maximize their profits better,” said ABI Research analyst Filomena Iovino.

Apple Inc and Microsoft Corp have hoisted bright red banners on their websites telling online shoppers to get holiday gifts for delivery as soon as possible on some of their newest and most expensive products.

A $ 800 11-inch iPad Pro may be shipping as soon as November 17, but the cheaper and newer $ 330 entry-level iPad could take nearly a month or more.

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

Samsung will also ship the latest $ 1,900 Galaxy Z Fold a week ahead of the $ 1,200 S21 Ultra. Both are loaded with the latest 5G chips.

Qualcomm Inc, which makes high-end 5G-enabled chips for Apple and many of the best Android phones, said its customers are focusing on premium, high-end devices.

“Since there are fewer cheaper phones, cheaper phones won’t be as cheap as we usually see,” said Runar Bjørhovde, an analyst at research firm Canalys.

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

Smartphones are expected to average $ 410 this holiday quarter, compared to $ 376 in the previous quarter and $ 395 last year. According to IDC, average selling prices for laptops are expected to rise 8% to $ 830 for the holiday quarter.

GoPro Inc, which shifted production last quarter to focus on high-margin action cameras, said earlier this month that consumers were buying cameras at the top of its range priced in excess of $ 300.

Laptop manufacturers, who rely on factories in Asia for most of their components, have also shifted production of the cheaper 11 “Chromebooks to high-end 14” and 15 “variants, the analyst said. IDC Bryan Ma.

“It works in a supply-constrained environment as consumers have no choice … So when supply meets demand, manufacturers can devote more production to low-end products to attract the most price-sensitive users,” said Ma.

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