The entire tech industry is set to drop the prices of existing hardware, but Intel has other plans in mind. To the surprise of many, it appears that Intel is planning to do the exact opposite. The company has decided to hike up the prices of existing CPUs and peripheral chipsets by up to 20 percent.
A report released by Nikkei Asia claims that Intel has gone ahead with a price hike plan and has informed its customers accordingly. The company is set to target its latest line-up of CPUs along with other components such as controllers. The price hike is expected to commence in the coming fall of this year. Whether it’s Wi-Fi chipsets, connectivity controllers, or CPUs, everything will become more expensive.
Intel claims the price hikes are required due to the various surging costs that are necessary to keep CPU and chip production up to date with the industry’s demand. The perpetual rise in inflation mixed with the current economic condition of the world also contribute to this. Consumer products have seen a 9.1% upcharge in June globally, a 40-year record high.
In addition, the production costs and the prices of raw materials for the manufacturing of said chips have gone up considerably, according to executives over at Intel Headquarters. The percentage increases are still not finalized, but the price hike could range from 10 percent to well over 20 percent, depending upon the different types of chips in question.
But there are many other reasons as to why Intel is driving up prices, as well. Case in point, Intel warned of a weakening demand in its last earning reports back in April, and informed of macroeconomic pressures on the company due to COVID-19 lockdowns and the impact of the Russia/Ukraine war.
The CEO of Intel, Pat Gelsinger, informed investors back in February to expect lower margins as the company plans to build manufacturing hubs worth billions of dollars in the U.S. and Europe. This news alone sent the stock prices to come down crashing.
The company’s brand new 13th Gen Raptor Lake CPUs, in addition to its mobile alternatives, are going to release in the fourth quarter of 2022 and the first quarter of 2023, respectively. So, expect slightly higher prices on CPUs and notebooks when they’re introduced to the public.
Semiconductor competitor, TSMC has similar interests in mind in terms of price surges. TSMC announced to its clients that they’d be raising prices by single-digit percentages after its most significant price increase in a decade. Most recently, due to falling demand and piling inventories, many companies working with the chip-maker have actually asked to modify their orders.
Even though the global chip shortage has largely been mitigated at this point, thanks to lower demand and better supply, manufacturers are actually in for a potential loss. A price hike will further worsen that. A rise in retail prices for Intel products will also affect its competitors who serve the same userbase, but whether AMD and NVIDIA follow suit in Intel’s direction remains to be seen.