Chip Shortage Drives Record-Level Price Increases With No End in Sight

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Chips are omnipresent, from cars, phones, computers and even toothbrushes, and the recent shortage shows no sign of ending and is pushing up prices. The situation is so bad, that some experts even call it “chipageddon” or “chipocalypse.”

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The Wall Street Journal reports that price increases are now affecting 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,” the WSJ reports.

For example, a laptop geared toward videogamers, made by Taiwanese manufacturer ASUSTek Computer Inc., rose from $900 to $950 this month, according to the WSJ, and the cost of a popular HP Inc. Chromebook rose to $250 from $220 at the beginning of June.

In addition, HP has raised consumer PC prices by 8% and printer prices by more than 20% in a year, the WSJ notes, according to Bernstein Research. 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, the WSJ adds.

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Last month, Jim Whitehurst, IBM president, told the BBC that the shortage would last at least a “couple of years.”

“There’s just a big lag between from when a technology is developed and when [a fabrication plant] goes into construction and when chips come out,” Whitehurst told the BBC. “We’re going to have to look at reusing, extending the life of certain types of computing technologies, as well as accelerating investment in these [fabricating plants], to be able to as quickly as possible get more capacity online,” he said.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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