Semiconductor Chip Shortage May Affect Holiday Toy Supplies

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If you’re a parent, holiday shopping may not have even crossed your mind yet. After all, it’s only September and the Halloween displays have barely begun to hit stores. But parents may want to consider shopping for toys early this year — like now — because the microchip shortage is impacting more than just cars and microwaves.
The toy industry is grappling with this shortage in advance of the holidays, too. Toys that feature light, sound, motion or any sort of tech need electronic chips. And if you’ve visited a Target toy aisle lately, you know that means that a lot of products could be affected.
With the increased demand in the past years for work-at-home office tech, gaming consoles and other trendy home electronics, we’ve seen demand for semiconductor chips surge. This increased demand combined with pandemic-related manufacturing issues has resulted in a global chip shortage affecting numerous products and businesses. But one industry that hasn’t really been covered in the news yet (except in the case of the sought-after Nintendo Switch, perhaps) in regard to the microchip shortage is the toy industry.
We’ve taken a closer look at exactly how the chip shortage will affect your holiday shopping so you can be prepared. To help us out, we also sought out insider information on availability and pricing from Lev Nelson, a toy industry veteran who heads up Sky Castle Toys.

Why Toy Makers Are Having a Hard Time Sourcing Chips for Toys

Credit: LetsGlow Studio

You’ve likely already heard about the global semiconductor chip shortage, but have you thought about what it might mean for you as we approach the holiday shopping season?
A huge percentage of modern toys include electronics these days. If a toy has any sort of interconnectivity, like a complimentary app, for example, it uses a chip. If it features movement, light or sound, it uses a chip. And that’s a lot of toys.
But Nelson says his industry, in particular, has had trouble sourcing processing chips. This is because comparatively, toys don’t make the same money. “The global shortage of chips has handicapped the toy industry because we are competing with other major industries that work on higher-margin items like cars, washing machines, or smartphones.”
Fortunately, Nelson’s company gambled on ordering chips in bulk for the rest of the year back in January. So while they’re positioned to fulfill holiday demand for their new product line, LetsGlow Studio, other toy manufacturers may not have been so lucky.

Which Types of Toys Are Affected by the Chip Shortage?

While not all toys will be affected by the chip shortage, parents should anticipate shortages of certain types of gifts.
“Toy categories like construction, plush, outdoor, and action figures don’t generally have a lot of electronic functions, so they won’t be impacted as much by this shortage,” says Nelson. If your kid’s preferred toys are in these categories, you can breathe easily.
But anything with an electronic component might be hard to get. “Categories like RC, STEM and especially tech will be greatly affected, and consumers interested in buying those types of toys for their kids this holiday should start shopping now.”

Hot 2021 Holiday Toy Predictions From a Toy Expert

Credit: Lego

OK, we’re ready to shop. But which hot holiday toys should parents start looking for, and setting deal alerts for?
LEGO sets are always a popular option, and these days Santa hears a lot about LEGO robotics toys. So we think this year’s LEGO Technic 4×4 Mercedes-Benz Zetros Trial Truck will be big.
Gaming consoles are still hugely in demand as well, so expect the new Xbox Series X and the latest version of the Nintendo Switch to be holiday hits for tweens and teens. And VR fans will no doubt want the Oculus Quest 2 gaming headset.

Credit: Microsoft

For toddlers, we like VTech’s Sit-to-Stand Learning Walker. And for slightly older kids we predict the Baby Alive Lulu Achoo doll, Squeakee the Balloon Dino, Kid Trax USPS Mail Carrier ride-on and the Echo Dot Kids Edition speaker will top wish lists.
Magical (thanks to electronic chips) toys are also big for 2021. So our crystal ball predicts the Magic Mixies Magic Cauldron set could be a popular gift.

Credit: Razor

Finally, parents trying to get their kids outdoors and active will be impressed by the lights on Razor’s new RipRider 360 Lightshow due to be released on September 19th, as well as Razor’s ever-popular selection of hoverboards, electric scooters and electric rides (including go-carts) for older kids, plus RipSticks.

Start Shopping Now Before Black Friday to Get The Best Toy Deals

The bottom line here is that you may want to start checking around for hot holiday toys now. In fact, electronic chips may not be the only issue when it comes to procuring your family’s preferred gifts.
Aside from the chip shortage, supply chain strain caused by the COVID-19 pandemic could impede your holiday shopping. It may not get to the levels of toilet paper scarcity that occurred in the prime of the pandemic, but do plan ahead.
Container shortages and transportation costs will also factor into limited product availability this season, says Nelson. “Expect a lot of toy shelves to be empty before Black Friday even hits.”
While this sounds like ominous news, perhaps with a bit of foresight, parents can still score the toys they need before December. Unfortunately, however, you may be in for an additional surprise when it comes to prices.

Toy Prices Could Be Much Higher for Holiday 2021

Limited availability will likely and up affecting pricing. So parents might want to brace themselves for sticker shock.
“The repercussions of COVID and its effects on the global supply chain will greatly affect pricing and availability of many goods normally in huge supply in the U.S., so consumers shouldn’t be surprised with inflated retails and less availability this fall,” says Nelson.
Not only should parents shop early, but we also shouldn’t necessarily expect to score the awesome deals that usually accompany Black Friday. “For any business that manufactures hard goods, supply chains are difficult at best and consumers are going to start seeing (and paying for) the fallout from these shortages.”
Happy toy hunting, parents. This season may be a tricky one.

Whatever toys you’re searching for this holiday shopping season, make sure you’re getting the best price. Set a custom Deal Alert and we’ll let you know the moment a new discount hits our forums. Additionally, keep an eye out for our Black Friday shopping guides as we get closer to Thanksgiving. In the meantime, you can start shopping now with our Kids’ Toy Deals and Sales page.

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Liam Fitzpatrick

Liam Fitzpatrick has written and edited for various digital sites, including Slickdeals, Ranker, Cracked, and Screen Rant. He's always got his eyes out for fresh deals, especially when it comes to entertainment and technology. If you ever want to talk about comic books, classic sci-fi, or Magic: The Gathering, he'll be ready and waiting.