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Intel warns customers to expect price hike for certain chips

Sources close to the matter said the rises could be anywhere between single digits and more than 20%

Intel has started informing customers of a planned price hike for products in various market segments, while internal sources have reportedly revealed the prices will begin to rise in Autumn 2022 due to the rising costs of production.

The company told IT Pro its plan to raise prices was previously announced in its Q1 2022 earnings call but further details on the products and business segments that will see the hike are yet to be revealed.

According to sources speaking to Nikkei Asia, the products included in the price rise will include those that are core to its PC and server business, in addition to other areas such as the chips required for networking products.

Intel told IT Pro that it has not publicly disclosed the specifics of the price changes, nor has it publicly disclosed the impacted products. However, one source speaking to Nikkei Asia said the percentage increases could be anywhere between the single-digit range and maybe even more than 20%.

A similar price rise was also announced by TSMC, the world’s largest contract chipmaker, saying it planned to hike prices similarly by up to 20%.

The increases may also vary depending on the type of chip. When IT Pro approached Intel for confirmation of the reports, the company said: "On its Q1 earnings call, Intel indicated that it would increase pricing in certain segments of the business due to inflationary pressures. The company has begun to inform customers of these changes".

The semiconductor shortage in the technology industry is well documented and has persisted since 2020 after a range of different factors, such as geopolitical tensions, pandemic-related shifts in demand, and disruptions at foundries across the globe, among other factors, all culminated in a global shortage.

Most businesses that rely on semiconductors have felt the effects of the scarcity, including the GPU market that has famously impacted the video game industry and PC builders.

Cisco is another major company that has experienced financial hardship as a result of the shortage, with the company thought to be sitting on a backlog of orders that it currently can’t fulfil worth billions of dollars.

Most nations around the world are now facing rising inflation rates, in part due to the ongoing war between Ukraine and Russia, combined with the lingering pandemic-related hits to their economies. 

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It was revealed this week that both the US and UK's inflation rates hit 40-year highs of 9.1%, while the average for countries with advanced economies, members of the Organisation for Economic Cooperation and Development (OECD), has at least doubled since 2020. 

The UK is facing a cost of living crisis as consumer prices in areas such as utilities have soared in recent months, and will continue to soar into the new year, according to forecasts

A quarter of UK businesses are also expecting to raise their prices as a result of rising inflation rates, according ONS figures.

Intel admitted in its most recent earnings report that “the pandemic has significantly increased economic and demand uncertainty,” and that the “demand for [its] products could be materially harmed in the future” as a result.

Questions around when the chip shortage will end are currently met with mixed predictions and Intel had previously warned that it could extend well into 2023

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