Intel Tells Customers Price Hikes are Coming, Up to 20%: Report
Intel has started informing clients of impending price increases across the majority of its microprocessors and other chips — reports Nikkei Asia.
According to the publication’s sources within the industry, the American chipmaker will start hiking prices later this year due to the surging costs of production and materials.
Intel will raise prices on everything from its CPUs for servers and personal computers to other chips like Wi-Fi modems and more. Price changes are expected to take effect sometime in the autumn.
While Intel is widely known for the consumer CPUs that go into DIY computers, and those will presumably go up in price, they only make up a small fraction of the company’s overall sales.
Intel’s server and enterprise customers will probably take the biggest hits, as will OEMs like Dell, Acer, and Asus. The latter is especially likely to pass off the higher prices they pay for Intel components to the end user.
One of the sources said Intel is yet to finalize the percentage increases and they will possibly differ across products. However, the company is likely looking at anywhere from a single-digit percentage increase on some products to more than 10% and even 20% on others.
Chipmakers like Intel previously couldn’t get enough chips out the door to meet demand, resulting in a global shortage. While Intel expects the chip shortage to continue into 2024, things have turned around a fair bit already.
However, just as supply is starting to improve, chipmakers are being battered by growing costs and inflation. Suppliers of chip materials like silicon wafers have already started telling clients of price hikes of at least 20%.
At the same time, the global spike in inflation is also driving down demand for the consumer electronics that Intel’s chips, and those from many other companies, power. In the U.S. alone, consumer prices reportedly rose by 9.1% in June, a 40-year record.
“On its Q1 earnings call, Intel indicated it would increase pricing in certain segments of its business due to inflationary pressures. The company has begun to inform customers of these changes,” Intel said in a statement.
During the April earnings call, Intel CEO Pat Gelsinger said the company would “remix the products to higher price points.” CFO Dave Zimmer added Intel was “looking for targeted price increases in certain segments.”
Intel’s Asian rival and the world’s largest contract chipmaker — Taiwan Semiconductor Manufacturing Co. (TSMC) — hiked prices by as much as 20% in January and has already notified clients of an upcoming “single-digit” percentage increase in 2023. The Apple supplier also warned of waning demand for PCs, smartphones, and consumer electronics as a whole in March.
A recent report indicated that Samsung Electronics Co., another chipmaker, is also discussing price hikes of up to 20% with customers of its microprocessor fabrication business.