Electronics and appliances could get more expensive after the holiday season

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Representational image, courtesy of: @pixabay

Highlights

  • China’s electricity crisis could impact production after Diwali
  • China’s power shortage adds to chip shortage challenge
  • Supply shortages and price hikes could occur from November to December

Prices for electronics and household appliances like washing machines, televisions, refrigerators, air purifiers and air conditioners could rise from December due to an additional challenge from the electricity crisis in China.

According to reports, various factories in China are operating with lower capacities due to a power shortage. This could present a challenge for the Indian consumer durables industry which sources in China for around 70-75% of its components.

Component supply varies across brands and brands, for example, is highest for TVs and least for refrigerators, experts say.

Due to the shortage of supply in China, industry sources say Indian manufacturers may very soon face a shortage of materials and cost pressure to maintain supply.

“Previously we had a chip shortage which impacted production, now the availability of electricity in China is another challenge,” said one of the sources mentioned above.

So far, during the holiday season, there has been no impact as manufacturers stock up to meet the festive demand. But a supply shortage situation could arise soon, perhaps after Diwali, in November itself, he said.

Manufacturers are already facing inflation in commodity costs since the pandemic, coupled with higher shipping costs and semiconductor shortages.

Over the past nine months, as the cost of inputs has risen by more than 23%, home appliance manufacturers have experienced a price hike of about 15% for all products.

Panels that are used in televisions, prices went up 4x5x, other components like semiconductors, copper, wires, small components soared like anything, sources said. In fact, the time taken for transportation from China to India, while it typically takes 22 days, now takes over 60 days, they said.

Therefore, with this added challenge of the energy crisis in China, resulting in a shortage of materials and higher costs, manufacturers may be forced to make another price hike very soon, they said.


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