Electronics will be more expensive as chip companies raise prices

Analysts told CNBC, the world’s largest foundries – manufacturing company included Semiconductors Taiwan, Samsung and Intel – are considering further price increases.

“Chip companies have seen price increases of 10-20% over the past year. We expect another price hike this year but the increase is high,” said Bain semiconductor market analyst Peter Hanbury. will be less (about 5-7%)”.

Chip foundries are increasing in price partly because the money spent on their research and development activities becomes more and more expensive.

“Components used in chip production have increased by 10-20%” – said Mr. Hanbury – “Besides, the amount of labor needed to build new semiconductor facilities has also been short and wages pay to workers also increased.

Last week, Nikkei Asia reported that TSMC had warned customers for the second time in less than a year that it planned to raise prices. The company is said to be planning to raise prices by single digit percentage points. The company cited concerns about inflation, rising costs and its own expansion plans as reasons for the price increase.

A TSMC spokesperson told CNBC that the company would not comment on this information.

In another development, according to a Bloomberg report last Friday, rival Samsung will increase the price of chip production by up to 20%. Samsung did not immediately respond to CNBC’s request for comment.

“With a shortage of semiconductor chips, manufacturers can charge higher fees when customers repeatedly ask to ensure supply,” said expert Hanbury, adding that many technology companies hope to , shortages should ease for certain chips later this year.

Price increase according to inflation

Forrester analyst Glenn O’Donnell told CNBC that an increase in chip prices should come as no surprise to anyone in the current economic climate, adding that he expects prices to rise around 10-15. %, or its equivalent of inflation.

Over the past two years, the COVID-19 pandemic has contributed to a global chip shortage.

“Chipmakers face growing supply problems as the Ukraine war worsens and semiconductor demand remains high while supplies remain strong,” said Mr. O’Donnell. limited,” says O’Donnell.

Despite the growing cost of living crisis, companies that integrate chips into their products may have to start passing costs on to consumers.

“Increasing chip prices will put additional stress on all electronics manufacturing companies. These companies will have to pass on these price hikes to their customers, which will cause difficulties in the current environment.” or companies have to accept lower margins,” said Mr. Hanbury.

According to expert O’Donnell, devices such as personal computers, cars, toys, consumer electronics, home appliances and many other products will be more expensive. “Margins for such products are already tight, so manufacturers have no choice but to raise prices,” O’Donnell said.

Meanwhile, Syed Alam, global head of semiconductors at Accenture, told CNBC that the extent of price increases will depend on the share of semiconductor costs in total product costs. Mr. Syed Alam added that the price increase will also depend on the ability of manufacturers to cut costs in other areas and the competitive landscape of each product category.

However, some industries are starting to see a drop in market demand and this cost increase will be negligible. “The smartphone market, for example, has seen a drop in demand, so it’s not going to see a huge increase,” said Mr Hanbury.

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