Expect more bad news if you’ve been dealing with high gas prices and rising expenses for everything from ramen to rent…. Smartphones, computers, and other devices are going to be more expensive this year because of the highest inflation increase in four decades.
Unsurprisingly, a new study from the Labor Department, issued on Tuesday, confirmed exactly how serious of an issue inflation has become in recent months. In March, the monthly Consumer Price Index data from the Department of Labor showed that inflation had risen 8.5%. Since 1981, the inflation rate has risen at the quickest pace. In addition, the global supply chain is on the verge of another wave of disruptions, which means that customers face a difficult and costly journey ahead.
Despite the fact that it may be some time before the entire impact of inflation is seen by ordinary gadget shoppers, there is already evidence of major price hikes in some goods. Global PC shipments declined year-over-year in Q1 2022 for the first time since the same quarter in 2020, according to a Canalys analysis issued this week. Worldwide PC sales climbed by a stunning 15 percent despite a 3 percent drop in shipments. More money is coming in from PC producers, even if they are selling fewer computers than they did previously.
Seismic global events have had a detrimental influence on demand and supply, hitting the sector at a time when consumer and education purchases have naturally declined following the highs of last year, writes Canalys Senior Analyst Ishan Dutt. ” As a result of the conflict in Ukraine, commodity prices have risen across the board, from oil and gas to metals to food.
PC shipments fell for the first time in seven straight quarters, mostly due to the pandemic-instigated shift to remote working. According to IDC Program Vice President Ryan Reith, laptop prices have been rising since October of last year. When asked about laptop costs in October, Reith told The Register they’d risen to $820, up from $790 the year prior.
All of these price hikes begin early in the long journey from the manufacturer to your doorstep. For the first time in more than a decade, TSMC, the world’s largest semiconductor chip foundry, announced a price rise of up to 20%. Following the lead set by TSMC, other chipmakers have increased the price of their products, in some cases surpassing TSMC’s price tag. While some of the largest cash-rich brands like Apple can maneuver their way around some of these price hikes and offset costs, most smaller firms end up inevitably turning those increased prices over to their eventual customers.
In the smartphone market, there’s ample reason to anticipate that comparable price rises will spread. As a result of delays in the supply chain and inflation, the average smartphone price globally rose from $287 in 2020 to $308 in 2021. While some phone makers may deprioritize cheaper models in favor of glitzier, more costly models with larger profit margins, Counterpoint forecasts a price hike in 2022. That’s great for manufacturers, but it’s a problem for consumers who want a new phone but can’t afford to buy one.
As it turns out, there are even more issues to deal with.
Inflation isn’t the only problem to consider if you plan on purchasing a new item in the near future. Russia invaded Ukraine just as major component supply problems were beginning to ease due to a pandemic-induced shortfall. A month after crossing the border, Russia was able to compel Ukraine’s two largest neon suppliers to halt operations. Since neon is vital to semiconductor chip fabrication, this is a severe concern for gadget production. Those two Ukrainian sources supply around half of the world’s semiconductor-grade neon.
Pandemics don’t seem to have finished their work yet. Meanwhile, companies and whole cities like Shanghai have had to shut down in China due to a new epidemic of covid-19, which has prompted the U.S. to abandon the final remnants of covid-19 protections. Many electronic component manufacturers in Taiwan, according to Reuters, have said that they would be halting production for at least another week as a result of the virus. An Apple supplier in China has declared that it would no longer be making iPhones in Shanghai, which accounts for about 20-30 percent of the company’s output.
Higher costs in the not-too-distant future are anticipated due to a combination of inflation, European conflict, and supply interruptions caused by pandemics. It’s possible that things may get a lot worse very quickly. An extended and increasing conflict in Ukraine might make restoring neon facilities harder more difficult, while new viruses, although rare, could threaten to severely disrupt the manufacture of important components.
Everything points to higher prices for devices, including the best-case scenario of a war in Ukraine, a pandemic, and no inflation. The only thing that remains to be seen is how long and how steep they will be.