Intel has informed its customers that it plans to raise the prices on many of its CPUs and peripheral chip products later this year, and in some cases, the price increases may reach more than 20%.
As reported by Nikkei Asia, the products impacted by these price hikes look to be such flagship items as Intel's central processing units for servers and computers and "chips for Wi-Fi and other connectivity."
According to executives, the decision to increase prices stems from the "surging costs for production and materials," and the amount that the prices will be increased will vary by product. The price changes will range from a "minimal single-digit increase" to "more than 10% and 20%."
This move is also timed with an inflation surge around the world that has "clouded the outlook for consumer spending." The U.S. in particular has seen consumer prices rise 9.1% in June, which set a 40-year record.
As reported by Gartner, 2022 has also seen a decline in PC shipments due to "geopolitical, economic, and supply chain challenges impacting all regional markets." This accounted for the sharpest decline in nine years.
“The decline we saw in the first quarter of 2022 has accelerated in the second quarter, driven by the ongoing geopolitical instability caused by the Russian Invasion of Ukraine, inflationary pressure on spending, and a steep downturn in demand for Chromebooks,” said Mikako Kitagawa, research director at Gartner.
“Supply chain disruptions also continued, but the major cause of PC delivery delays changed from component shortages to logistics disruptions. Enterprise buyers continued to experience longer PC delivery times than usual, but the lead times began to improve by the end of the second quarter, partially because key cities in China reopened in the middle of the quarter."
“To maintain profits as inflation increases costs, the PC industry is having to raise average selling prices (ASPs) despite weakening demand. The reduction in the mix of PCs from Chromebooks, which tend to have low price points, and shift to premium products also helped increase the average ASP. However, an increase in inventory, especially in the consumer channel, could cause an ASP decline as vendors will try to lower inventory.”
These comments follow Intel CEO Pat Gelsinger saying in May that he anticipates that the ongoing chip shortage will remain an issue into 2024.
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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and on Twitch.