Israel faces shortage as demand for computers soars, pushing up prices

Israel is experiencing a shortage of computers in stores: The coronavirus crisis, the lockdown, the beginning of the new school year with remote learning at schools, and universities have all boosted demand for desktop computers, laptops and tablets. As a result, the shortage has driven up prices by as much as 33%.

A review by the price comparison website Zap conducted on behalf of TheMarker shows a steady increase in prices in everything that has to do with home computing. The price of laptop computers increased on average by 16%, from an average of 3,825 shekels ($1,130) as of January to 4,536 shekels as of September. Desktop computers are also 20% more expensive, while tablets are 33% more expensive – from an average of 1,772 shekels per tablet as of January, to 3,277 shekels as of September.

The explanation lies in the global coronavirus crisis as a whole: It greatly increased demand for personal computing, while interrupting global supply chains, particularly for low-cost devices. Internationally many models of devices are in short supply at stores, and restocking is taking a long time.

On the websites of major computing retailers KSP and Ivory, for example, all models from major brands such as Dell, HP and Asus priced at up to 3,500 shekels are out of stock at nearly every store in Israel. They are, however, available for ordering.

Dror Zelit, CEO of Zap, stated, “The market wasn’t ready for the outbreak. Suddenly everyone was working and studying via Zoom and video chats, and needed equipment they hadn’t previously had at home,” he said. There were also other factors: “Supply was limited because some of the factories in China halted production, there were problems with shipments from abroad due to the lockdown, stock and replacement parts were delayed or didn’t arrive. This affected prices in all the categories we reviewed.”

Zelit noted that web cameras bucked the trend and dropped in price, because the supply met demand. Web cameras are simpler to manufacture than laptops, and importers managed to import enough that prices dropped, he said.

In terms of demand for home computing products, the effect of the coronavirus was apparent as early as February, even before the virus was identified in Israel. Importers reported shortages because Chinese factories were closing or slowing production. At the time, local stores were fully stocked, but stocks began to whittle down by April, when Israel was in the first lockdown. The Chinese factories resumed production, but in the meanwhile the pandemic spread around the globe and suppliers have struggled to meet demand.

Itai Chen, VP-commerce of Best Mobile, notes that manufacturers haven’t been able to meet demand, particularly when it comes to manufacturing processors and screens. “This has led to a shortage of all the major brands, such as Lenovo, Dell, HP and Asus. We’re getting little drips of stock, in small quantities. The demand is insane,” he said. Regarding certain brands, there’s no forecast as for when they’ll be back in stock, he says. “The shortage will be with us through the end of 2020.”

Market sources say that computer sales in Israel to consumers are up 20%-30% compared to the same quarter last year. Households now need several computers, with parents working from home while at the same time children attend class on Zoom. In general, the third quarter typically sees the strongest computer sales, as the academic year begins.

Corporate demand for computers has increased as well, as companies switch to remote working and supply their employees with computers. The trend is notable within Israel’s civil service: The Education Ministry recently closed an agreement to acquire 144,000 computers over the next year, at a total cost of 1.2 billion shekels.

Among private consumers, the least expensive computers are the ones seeing the highest demand: Those retailing for 2,000-3,000 shekels. As a result, these are the ones facing the biggest supply shortages, and consumers are left with options that cost 4,000-5,000 shekels, if not more – faster, more advanced computers intended for activities that necessitate them, such as gaming.