On Thursday, Intel said that due to rising costs, the company had begun to inform customers that it would raise the prices of most microprocessor and peripheral chip products later this year.
According to foreign media reports, the products Intel plans to raise prices this autumn include home computers and server CPUs, as well as peripheral products such as Wi Fi chips. However, at present, the specific price increase has not been finalized, but it may range from a few percentage points to 10%-20% according to different products.
Intel‘s move comes amid soaring inflation in the United States and around the world. The U.S. Bureau of Labor Statistics released data on the 13th, showing that the U.S. consumer price index (CPI) rose 9.1% year-on-year in June, hitting a 40 year high.
Earlier this year, demand for smartphones, PCs, TVs and game consoles weakened, and major equipment manufacturers have said inventories of unsold products are increasing. Samsung Electronics has informed its suppliers of a range of products to stop shipping.
According to Gartner, a market research organization, global mobile phone sales will fall by 7.1% this year, and global PC sales will fall by 9.5%. Ranjit Atwal, a senior analyst at Gartner, said: "affected by geopolitical turmoil, inflation, exchange rate fluctuations and supply chain disruptions, global enterprises and consumers‘ demand for smart devices has declined, and the PC market in 2022 will also be seriously affected."
As a leading enterprise in the chip market, Intel warned that market demand was weakening and reiterated its gloomy macroeconomic outlook. In the earnings conference call on April 28, Intel executives hinted at the upcoming price rise. CEO pat Gelsinger said the company would "reposition its products to higher prices". Dave Zimmer, chief financial officer, said the company was "seeking targeted price increases in certain areas".
Looking at the entire semiconductor industry, the news about price increases has not stopped in the past few months. Part of the reason why chip foundries raise prices is that the current chip market is in the "seller‘s market", and manufacturers have a strong say in prices. At the same time, production costs are becoming more and more expensive. The cost of chemicals used in chip manufacturing increased by 10% to 20%. Similarly, there is a shortage of labor required to build new semiconductor facilities, and the wages of employees are also rising.
Forrester analyst Anton Nell said that in the current economic environment, the rise in chip prices may be roughly in line with inflation. In the past two years, COVID-19 has exacerbated the global chip shortage. Chip manufacturers are facing increasingly serious supply problems, which have been exacerbated by the conflict between Russia and Ukraine. The market demand is still large, but the supply is limited. Chip manufacturing will consume a lot of electricity, and global energy prices are rising.
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