LED Supply Chain Disruptions: The reasons behind shortages and price hikes

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The outbreak of the pandemic has impacted the entire world. Whether it is the individual gatherings or the business setups, everything has been badly impacted by Covid. In such a situation, the LED Supply chain is no exception. A significant impact on the supply has been noticed since the outbreak.

How does it impact the consumer market?

Overall, there has been no significant impact on the use of the LED products. Even the year-by-year growth statistics of the industry have remained the same. In such a situation when the number of products offered in the market has reduced, it certainly highlights the problems in the existing supply chain.

With the lower product quantity in the market, the principles of economics come into play. The increase in demand increases the price of the products, which ultimately increases the price burden on the consumers. Usually, such a burden results in lower demand, as the customers feel the product to be out of budget. With no other changes in the market forces, such an attitude maintains the equilibrium where the demand of the products equals the supply.

Reasons behind the supply shortage and price hikes:

There are multiple reasons for the supply shortage during and after the pandemic. We’ll share a few important ones here.

Reliance on necessities:

The outbreak of the pandemic left the luxury industries in awe. The perception of people changed, and the spending trends shifted to the purchase of necessities only. Such an attitude created a sudden shift in the demand, forcing the companies to produce a lesser number of goods.

Lockdowns:

Apart from the market demand, the restrictions imposed by the government on the public led to lower or no production of the LED products. Even from the capital and resources point of view, the investors did not want to put in any more money on stake. The result was a decrease in the supply.

Increase in costs:

Even the products that were still being produced had to procure raw material at a higher cost, and the shipment charges all around the world increased significantly. After compensating for the cost increases, the overall price of the product soared drastically. This price increase is different from the supply shortage. Combining both, a deep supply whole was seen in the market.

Increase in demand:

Once the pandemic stabilized a bit, it resulted in more demand for LED products by the users. However, the investors were still skeptical about the production; the user-created price increase and product shortage developed.

Because of all these reasons, LED products’ prices increased significantly along with the product shortage. These problems still exist in the supply chain. However, normalizing of the situation and the introduction of SOPs indicate that things would be back on track soon. But for then, the shortage of products with higher prices is what the LED industry and the consumers have to face.

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