"I'm as mad as hell, and I'm not going to take this anymore!"
It was only 3 or 4 months ago when we were being told by suppliers that customers didn’t seem to mind the price increases that were being put into effect during the latter part of 1Q and early 2Q. Component suppliers commented numerous times that customers “were just happy they could get product, and didn’t mind the cost”. While there are still many CE products and components that are in short supply and are seeing price increases, particularly semiconductors, we have noticed a number of times recently that the easygoing attitude toward price increases has waned and the seller’s market seems to have lost a bit of its vigor.
Much of this is anecdotal, although the weakness in TV panel prices seems to indicate a certain amount of reluctance toward the price increases that have already been built in over the last year, and IT panel buyers (monitors and notebooks) are becoming more cautious with inventory into the holiday season. This is not to say that price increases will still not occur, but we sense a ‘disturbance in the Force’, rather than the complacency seen over the last 12 months. It is hard to gauge what underlies this change, but it would seem that the enthusiastic demand seen as the global economy emerged from a shelter-in-place environment has perhaps been sated, or at least has shown that it is not all consuming and has limits as to how far it will go to be satisfied.
We note that there have been smaller ups and downs throughout the last year in terms of CE demand, but, while we don’t believe that price increases or shortages in a number of components will abruptly end, the sense that those price increases need to be far more justifiable than in the past seems to be the case. Those brands who came into the year with very high expectations are now beginning to question the sustainability of those forecasts and targets. There is still some time before the key selling months (November & December) and final adjustments, positive or negative, will still be made, but the bloom is off the rose so to speak.
Much of this is anecdotal, although the weakness in TV panel prices seems to indicate a certain amount of reluctance toward the price increases that have already been built in over the last year, and IT panel buyers (monitors and notebooks) are becoming more cautious with inventory into the holiday season. This is not to say that price increases will still not occur, but we sense a ‘disturbance in the Force’, rather than the complacency seen over the last 12 months. It is hard to gauge what underlies this change, but it would seem that the enthusiastic demand seen as the global economy emerged from a shelter-in-place environment has perhaps been sated, or at least has shown that it is not all consuming and has limits as to how far it will go to be satisfied.
We note that there have been smaller ups and downs throughout the last year in terms of CE demand, but, while we don’t believe that price increases or shortages in a number of components will abruptly end, the sense that those price increases need to be far more justifiable than in the past seems to be the case. Those brands who came into the year with very high expectations are now beginning to question the sustainability of those forecasts and targets. There is still some time before the key selling months (November & December) and final adjustments, positive or negative, will still be made, but the bloom is off the rose so to speak.
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