Intel to increase chip prices amid inflation

By on
Intel to increase chip prices amid inflation

Intel Corp. told customers this week the company would begin hiking prices on its peripheral chip products in the fourth quarter as chipmakers deal with increasing costs.

“On its Q1 earnings call, Intel indicated it would increase pricing in certain segments of its business due to inflationary pressures,” Intel told CRN US in a statement. “The company has begun to inform customers of these changes.”

The semiconductor giant told channel partners and other customers to brace for price hikes of up to 20 percent in Q4 2022, sources confirmed to CRN US. The news was first reported by Nikkei Asia.

Multiple tech companies have reported slowing sales after two years of booming growth due to remote work forced by the COVID-19 pandemic. Consumer demand for smartphones, PCs, TVs and game consoles began showing signs of weakness in early 2022 earnings reports.

Sources told CRN US an official Intel communication indicated all processors, chipsets, and data centre products like FPGAs, NUCs and programmable devices will be affected. Intel told customers the price hikes are required because of inflationary pressures, rising material costs and production cost increases.

 

A chip shortage driving demand had held prices as PC makers recorded record shipments in 2020 and 2021. During a press conference last week, Acer Chairman Jason Chen told reporters his company was no longer suffering a chip shortage. “Some of the chip suppliers’ CEOs even called me recently to buy more chips from them,” he said. “The situation has changed.”

Intel has warned of weaking demand in its last earnings report in April and warned of macroeconomic pressures facing the company due to COVID-19 lockdowns and the Russia/Ukraine war. In June, Intel froze hiring in its PC chip division citing macroeconomic uncertainty. In April, the company announced that it would be pulling out of Russia completely, affecting 1,200 workers.

Intel CEO Pat Gelsinger in February told investors to expect lower margins as the company lays out billions of dollars to build manufacturing hubs in the U.S. and Europe. That news sent stock prices tumbling.

Fellow semiconductor giant, Taiwan-based TSMC has told clients it will raise prices by a “single-digit” percentage in 2023, Nikkei Asia reported, less than a year after its largest price increase in a decade. Nikkei reported that suppliers of chip materials such as Shin-Etsu Chemical, Sumco and Showa Denko have all told clients they will increase prices by at least 20 percent. GlobalWafers, the world’s no. 3 wafer material maker, also recently said it would race prices for chipmakers.

This article originally appeared at crn.com

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © 2018 The Channel Company, LLC. All rights reserved.
Tags:

Most Read Articles

Log In

Email:
Password:
  |  Forgot your password?