In a bid to contain the continuous increase in costs of production, the American multinational corporation, and technology company, Intel has revealed today that it has started informing customers of its plan to raise prices for many of its chip products.
In a statement released on Thursday, obtained by Nikkei Asia, the chipmaker disclosed that it has informed customers that it will raise prices on a majority of its microprocessors and peripheral chip products later this year, due to rising costs.
As per the report, the chipmaker plans to raise prices this autumn on flagship products such as central processing units for servers and computers, where it dominates the market, as well as a wide range of other items, including chips for Wi-Fi and other connectivity.
Meanwhile, according to Intel executives, price increases are necessary due to rising production and material costs. The percentage increases have not been finalized and may differ for different types of chips, but one of the people said they are likely to range from a low single-digit increase to more than 10% and 20% in some cases.
Intel’s move coincides with an increase in inflation in the United States and around the world. Consumer prices in the United States rose 9.1 percent in June, a 40-year high. However, while rising commodity, material, shipping, and labor costs have all put pressure on the chip industry, inflation has also clouded the outlook for consumer spending, making pricing decisions especially difficult.
Likewise, the demand for smartphones, PCs, TVs, and game consoles slowed earlier this year, and device makers have indicated that unsold inventory is growing. Samsung Electronics has instructed its suppliers to halt shipments of a variety of its products. Many of Intel’s key PC clients, including Acer and Asustek Computer, have publicly expressed concern about a downturn.
Additionally, suppliers of chip materials such as Shin-Etsu Chemical, Sumco, and Showa Denko have all informed customers that their prices will rise by at least 20%. Doris Hsu, CEO of GlobalWafers, the world’s third largest wafer material manufacturer, recently confirmed that the company was raising prices for chipmaking customers.