Intel tells customers that price rises are coming
Chip giant Intel has confirmed it will raises prices for a number of its products due to inflation.
Nikkei Asia reported on Thursday that Intel had told customers it will raise prices shortly for most of its CPUs as well as chips for Wi-Fi and other connectivity. Though not determined yet, the price rises are likely to be more than 20% for some chips: Intel's Core i CPUs cost upwards of $500. Nikkei Asia said this would affect the "majority of its microprocessors and peripheral chip products."
Innovation
Intel says the price rises were flagged to investors in its Q1 2022 earnings call on April 2.
SEE: Best Windows laptop 2022: Top notebooks compared
"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," Intel told ZDNet in a statement.
Intel chief financial officer Dave Zinsner said at the time its average selling prices (ASPs) for CPUs were up "greater than 25% year over year" and that it had strong demand for its high-end mobile and desktop CPUs across both its commercial and consumer customer base.
He also noted that OEMs were lowering inventory levels to better match demand and that Intel was looking at "targeted price increases in certain segments".
Shipments for premium computers have remained strong in recent quarters but shipments of cheaper computers like Chromebooks have stalled after the pandemic due to a drop in demand from education customers.
Gartner notes that the PC industry as a whole has raised ASPs to maintain profits as inflation raises costs of production. Some OEMs have done this by cutting back on production of Chromebooks due to their lower selling prices and boosting production of premium products to improve their ASPs.
Consumers are already stalling on laptop purchases due to concerns over inflation. PC shipments were down 15% annually in Q2 2022, according to tech analyst reports from Canalys and IDC this week. Gartner says shipments were down 13% and that this was the sharpest decline since 2013. Meanwhile, the US government this week also reported inflation rose above 9% in the year to June.
The price rises are coming as Intel pulls back from its $20 billion manufacturing plant planned for Ohio. It confirmed in June it would delay the project until Congress made progress on the CHIPS Act, which would release $52 billion in funding to boost US domestic chip manufacturing.
Intel chief Pat Gelsinger told the Washington Post this week that he will delay the project if the bill isn't passed.