Intel, the leading American multinational corporation and technology company, has informed its customers that it will increase the prices of majority of its microprocessors and chip products in late 2022.
Intel to Increase Prices of its Products
According to The Verge, the biggest chipmaker in the United States is now planning to raise its prices on its products like central processing units or CPUs for servers and computers.
Intel, which dominates the CPU and PC market, will also raise the prices of its chips for Wi-Fi and other connectivity.
The tech company says that price hikes are required because of the increasing cost of production and materials.
The new price list has not been announced yet, and the price may depend on the type of chip, but they are likely to range from a minimal single-digit increase to a 10% or 20% increase.
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Intel is Affected by US Inflation
According to Tom's Hardware, Intel's move comes amid an inflation surge in the United States and in other countries. The US reported consumer prices rose 9.1% in June, a 40-year record.
But while the rising costs of shipping, labor, materials, and commodities have all heaped pressure on this chip industry, inflation has also changed the outlook for consumer spending, making pricing decisions fraught.
The demand for computers, smartphones, TVs, and game consoles weakened in early 2022, and device manufacturers have stated that inventories of unsold items are mounting.
Samsung has told its suppliers of its products to stop shipments in the meantime, according to Nikkei.
Several of Intel's PC clients, like Acer and Asus, have warned their customers of a downturn. Jason Chen, Acer's Chairman, told reporters on July 13 that the company is no longer suffering a chip shortage.
Chen said that some of the chip suppliers have called them to say that there are more chips available as the situation has changed.
Intel warned of weakening demand in its latest earnings conference in April and has talked about the gloomy macroeconomic outlook at events.
Intel executives hinted at price rises to come, as CEO Pat Gelsinger said that the tech company would "remix the products to higher price points."
Intel's CFO Dave Zimmer added that the company is "looking for targeted price increases in certain segments."
The tech company said that on its Q1 earnings call, Intel hinted that it would increase pricing in certain segments of its business because of inflationary pressures. The company has started to inform its customers of changes.
Other Suppliers Increase Their Prices
Aside from Intel, Taiwan Semiconductor Manufacturing Co., the biggest contract chipmaker in the world, has told its clients that it will increase its prices by a single-digit percentage in 2023.
China's Semiconductor Manufacturing International Corp., which is a smaller scale chipmaker, also told its investors that it will increase its prices because of the rising costs of materials. The company's increased production costs also increased by 10%.
Suppliers of chip materials like Sumco, Shin-Etsu Chemical, and Showa Denko have all told their clients that they will increase prices by 20%.
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Written by Sophie Webster
