Smartphone Makers Set to Raise Prices as Impact of Chip Shortage Spreads

By Joseph Chalfant

Stockpiles of electronic components are dwindling, and now much of the smartphone industry has been forced to raise prices or set delays for upcoming products.

Phone manufactures are unable to find vital materials like power-management chips, semiconductors, and data chipsets. Shipping times for semiconductors alone have jumped to 19 weeks, well above the usual average of 12-14 weeks, according to the Wall Street Journal.

So far, Apple has managed to beat the supply-chain disaster as the global economy reopens. Others, like Samsung, Google, and Xiaomi, and 80% of the smartphone industry, haven’t been as lucky.

Samsung faced a 20% drop in shipments, Google has limited its release of the Pixel 5a 5G to just the U.S. and Japan, and Xiaomi has raised its price of the Redmi Note 10 by 8% to counteract rising parts prices, the Wall Street Journal reported.

The Wall Street Journal further reported that the prices of phones had increased by 5% across Q2. That is more than double the less than 2% increase that historical data from recent years typically shows.

The number of new device releases has also been impacted. In the first half of 2020, 370 new phones were released, according to the Wall Street Journal. The first half of 2021 has only seen 310 new devices, a 16% decrease over just one year.

Consumers may not see a return to normal for the tech industry any time soon. With faltering production due to the pandemic and a boom in chip demand, experts said that there might be a global shortage well into 2023, according to CNBC.

“Because demand will remain high and supply will remain constrained, we expect this shortage to last through 2022 and into 2023,” said a vice president research director at advisory firm Forrester, Glenn O’Donnell. “Couple that with the unstoppable desire to instrument everything, along with continued growth in cloud computing and cryptocurrency mining, and we see nothing but boom times ahead for chip demand.”

German chipmaker Infineon’s CEO Reinhard Ploss had a more optimistic outlook.

“I think two years is too long, but we will definitely see it reaching out to 2022,” Ploss told CNBC. “I think additional capacity is going to come … I expect a more balanced situation in the next calendar year.”