Sleep Number hit by lockdowns in China

There’s a new reason to lose sleep over the flea shortage. Sleep Number’s mattress production capacity is plummeting as shutdowns in Shanghai further slow production of the semiconductors needed to make the company’s high-tech beds.

Why is this important: Our need for chips goes far beyond phones and cars, making us vulnerable to supply chain misfires.

  • “When we think of chips, we think of supercomputers, servers and PCs – and the pandemic has finally brought to light that almost everything runs on semiconductors: our ovens, our refrigerators, the lights in our house”, Daniel Newman, principal analyst at Futurum Research, tells Axios.

Threat level: COVID-related lockdowns in China pose another threat to chip availability, which is largely concentrated outside the United States

  • Sleep Number said it expects its weekly chip supply to drop by about 50% by the end of the second quarter, which will restrict its ability to manufacture its “smart beds”.
  • For example, the crisis is threatening production of the FlexFit 3 Smart Base, a $2,399 to $4,199 adjustable bed that lets sleepers use their smartphones to activate underbed lighting and foot warming.

The big picture: Chipmakers, spurred by the Biden administration and a bipartisan push on Capitol Hill, have announced about $80 billion in investment in U.S. industry since the start of 2021, according to the White House.

Yes, but: Most of these factories won’t come online for a few years. Until then, companies facing shortages are expected to continue raising prices to compensate for their lost sales volume, contributing to our inflation crisis.

  • “With demand exceeding supply, we’ve had a lot of inflation” in mattresses, Jerry Epperson, mattress industry researcher and managing director of Mann, Armistead & Epperson, told Axios. “Everyone had shortages.”

What we are looking at: How much the prices increase.

About Mariel Baker

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