Chipset pricing is increasing, thanks to a price hike from manufacturers. This could exacerbate the shortage that is already occurring thanks to the Covid-19 pandemic. This price hike is likely to affect all electronics, including smartphones, computers and other electronics.
TSMC, the Taiwanese company that manufactures the chipsets used by Apple, Nvidia and Qualcomm, has announced a plan to increase prices for their chips by as much as 20 percent in 2022. This is due to a number of factors:
- High demand
- Increasing pressure for faster and more efficient chips that are also smaller
- The logistics of getting the materials needed for all components to build the chipsets due to supply issues caused by the Covid-19 pandemic
- An attempt to get so-called “double booking” under control, where TSMC’s clients order more chips than they need to secure production space and time during a supply crunch.
- TSMC’s pledge to invest $100 billion in the next three years
In the same report by Nikkei Asia that outlined the hurdles listed above, Qualcomm and MediaTek stated that their production costs increased by as much as 60 percent between October 2020 and June 2021. These high costs will eventually have to trickle down to consumers so manufacturers can avoid suffering severe losses. This could mean that some manufacturers will release more flagship models that have more bells and whistles—but also a higher cost—and cut down on low to mid-range options in their lineup.
For retailers, this is good news. A price increase in new phones means that demand will go up for models that are already on the market as well.
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