May 17, 2022

Chip Shortages Are Starting to Hit Consumers. Higher Prices Are Likely.

The global chip shortage is pushing up prices of items such as laptops and printers and is threatening to do the same to other top-selling devices including smartphones.

Price increases are snowballing their way through suppliers and key materials in chip making as the industry rushes to meet rising demand and plug supply holes. As a result, many of the world’s large chip makers are raising prices they charge to the brands that make PCs and other gadgets. Industry officials say the increases may continue.

Consumers are starting to feel the pinch. Prices of popular models of some laptop computers have crept up over the past two months, among other electronics becoming more expensive at retailers. A laptop geared toward videogamers—made by Taiwanese manufacturer

ASUSTek Computer Inc.



lists as its bestseller rose from $900 to $950 this month, according to Keepa, a site that tracks prices. The cost of a popular

HP Inc.

Chromebook rose to $250 from $220 at the beginning of June.

HP has raised consumer PC prices by 8% and printer prices by more than 20% in a year, according to Bernstein Research. HP Chief Executive

Enrique Lores

said the increases are driven by component shortages and that the company may adjust prices further to reflect cost increases.

Other PC makers have struck a similar note. “As we think about component cost increases, we’ll adjust our pricing as appropriate,”

Dell Technologies Inc.

Chief Financial Officer

Thomas Sweet

said on a recent earnings call. An ASUSTek executive in May said that the company was reflecting component cost increases in its pricing.

HP has raised consumer PC prices and printer prices over the past year.


dycj/Imaginechina/associated press

While some electronics have already risen in price, the broad impact on consumers is often hard to gauge because retailers can decide whether to make shoppers pay or absorb some of the price increases, analysts say.

Toni Sacconaghi,

a Bernstein analyst, said HP’s increases reflected an absence of usual discounts rather than all-out price increases.

Chip executives maintain that they aren’t using the shortage to fatten profits, and raising prices just reflects the higher costs their companies are paying. “We’re not taking advantage of this cycle to do anything on pricing, other than where we are paying more for the additional supply that we’ve got to get on board. We’re passing that on,”

Vincent Roche,

the CEO of chip maker

Analog Devices Inc.,


“We see cost inflation,” said

Hock Tan,

CEO of

Broadcom Inc.,

which specializes in wireless communications circuits used in

Apple Inc.’s

iPhones and

Samsung Electronics Co.

’s flagship handsets. Customers understand the situation and have been willing to stomach higher prices, he said on a call with analysts this month.

Industry officials said costs are up for things as diverse as silicon wafers that are the building blocks of chips and the resins and metals used in their manufacture.

Digi-Key Electronics, one of the U.S.’s largest electronic-component distributors, has raised prices of semiconductor-related components by roughly 15% this year because of pressures from the supply crunch, although it has tried to keep prices level where possible, said

David Stein,

the company’s vice president of global supplier management. Certain components now cost as much as 40% more, he said.

Broadcom is among the companies that have seen cost inflation.


David Paul Morris/Bloomberg News

Numerous factors are driving the surging appetite for chips that has led to shortages that have only been compounded by strained supply lines that are still disrupted from the pandemic. People bought record numbers of laptops to work and study from home during the pandemic. Demand for medical devices rose and the spread of superfast 5G mobile networks pushed people to buy new smartphones that could take advantage of the speed boost.

The number of chips sold in the world in April reached nearly 100 billion, a record, according to data from World Semiconductor Trade Statistics, a nonprofit representing many chip makers. Around 73 billion shipped in January 2020, just before the pandemic, reflecting how the industry has ramped up to meet demand.

Contract prices for computer memory have risen about 34% since the beginning of last year, according to data from Taiwan-based research firm TrendForce. More time spent playing computer games during the pandemic has also led to the emergence of a secondary market for

Nvidia Corp.

graphics cards that can change hands for more than the original retail price.

More time spent playing computer games has led to the emergence of a secondary market for Nvidia graphics cards.


tyrone siu/Reuters

The gadget-price increases are part of broader uptick in inflation in the U.S. economy as growth recovers from the pandemic and supply-chain disruptions persist. And so far, the rises aren’t as steep as those for some other goods. Prices for computers and other electronics rose at a 2.5% annual rate in May, according to U.S. government data, the biggest increase in over a decade. Prices broadly jumped 5% in May, driven by a sharp rise in energy prices.

Chip price increases are particularly pronounced for some so-called microcontrollers, which generally are the smarts for a range of gadgets, appliances and even cars. Supplyframe Inc., a company that tracks the prices distributors charge, said the median price of the top 20 bestselling microcontrollers increased by more than 12% since the middle of last year.

There are also secondary pricing effects from the chip shortage outside the tech industry. Car makers have had to curtail production because they lack chips. With less inventory, new vehicles are costing more.

The price increases within the chip industry itself aren’t uniform. On average, chip prices across all semiconductors shipped globally show little change since the beginning of last year, according to industry data, even as some subsectors, including wireless-communications and consumer-electronics chips, have seen increases.

In some cases, the pricing data doesn’t yet reflect the most recent cost increases seen across the semiconductor supply chain, said

Dale Ford,

the chief analyst at the Electronic Components Industry Association. Prices also are often set in longer-term contracts, he said, delaying when they are adjusted for market forces.

“Raw-material costs have gone up more recently, and I think people are now saying this is not a temporary situation,” Mr. Ford said. “Price increases are going to be durable.”

More chip shortage coverage

Further coverage of the semiconductor market, selected by WSJ editors.

A global chip shortage is affecting how quickly we can drive a car off the lot or buy a new laptop. WSJ visits a fabrication plant in Singapore to see the complex process of chip making and how one manufacturer is trying to overcome the shortage. Photo: Edwin Cheng for The Wall Street Journal

Write to Asa Fitch at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Related Posts

Are Vaccinated Americans Powering the Economy? Not Yet, Data Show

May 24, 2021

May 24, 2021

Vaccinated Americans are increasingly going out this spring—but not as much as their unvaccinated counterparts. Vaccinated consumers were less likely...

Hackers Target Videogame Publishers for Ransom, Source Code

June 15, 2021

June 15, 2021

Gamers have struggled for years with hackers who cheat and take over accounts. Now, videogame studios are coming under serious...

Gene Therapy, High-Tech Goggles Restore Some Vision to Blind People

May 24, 2021

May 24, 2021

Scientists are making dramatic strides toward a goal that once seemed almost unimaginable: Restoring limited vision to people affected by...

SEC Wants More Climate Disclosures. Business Are Preparing for a Fight

June 21, 2021

June 21, 2021

WASHINGTON—The Securities and Exchange Commission is preparing to require public companies to disclose more information about how they respond to...

Move to a New City for Work? No Thanks

June 7, 2021

June 7, 2021

Fewer workers have been moving for new jobs during the pandemic. Will anyone want to when it’s over? The percentage...

First Solar to Build New Solar-Panel Factory in Ohio

June 9, 2021

June 9, 2021

WASHINGTON—The biggest American-owned solar-panel maker is set to announce plans Wednesday to invest $680 million in a new Ohio factory,...

Neiman Marcus Rides a Rebound in Luxury Shoppers

June 15, 2021

June 15, 2021

Luxury shoppers are splurging again. Neiman Marcus Group Inc.’s sales have rebounded from last year when Covid-19 closed its stores...

Global Ad Spending Expected to Rebound Faster Than Previously Forecast

June 14, 2021

June 14, 2021

After a reversal last year, global ad spending is forecast to snap back from the pandemic even faster than previously...

Centene Settles With Ohio and Mississippi Over Pharmacy Benefits Practice

June 14, 2021

June 14, 2021

St. Louis-based Centene denied any liability in its dealings with state Medicaid programs. Photo: Jeff Roberson/Associated Press Centene Corp. CNC...

Former WeWork Chief’s Gargantuan Exit Package Gets New Sweetener

May 27, 2021

May 27, 2021

Nearly two years ago, SoftBank Group Corp. 9984 -2.20% sought to part ways with WeWork co-founder Adam Neumann when it...


July 29, 2021

July 29, 2021

Having SEO expertise is not the exclusive privilege of SEO professionals. This is a skill that can be mastered by...

Federal Covid-19 Workplace Rules Issued for Healthcare Facilities

June 10, 2021

June 10, 2021

The Biden administration is implementing Covid-19 workplace safety rules for millions of healthcare workers, limiting a plan that could have...

China’s Emerging Tech Firms Grapple With Losses

June 7, 2021

June 7, 2021

The red ink is piling up at China’s emerging technology champions, as these companies spend heavily in a bid to...

Fake Covid-19 Vaccines Pose New Threat in Africa

June 6, 2021

June 6, 2021

JOHANNESBURG—On a morning last November, officers from customs and an organized crime unit, backed by two K9 units, raided a...

Amazon Demands One More Thing From Some Vendors: a Piece of Their Company

June 29, 2021

June 29, 2021

Suppliers that want to land Inc. as a client for their goods and services can find that its business...