Here’s another result of the chip shortage that experts have been talking about for months: higher laptop costs.
Reports today show executives at major PC companies talking about how they’re going to have to pass on component costs to customers.
For background, we’ve known for probably a year that a massive chip shortage is going to impact all of the industries, like automotive, video gaming and telecommunications, that rely on these small etched silicon wafers.
After trade wars between the U.S. and China segmented IT manufacturing and service delivery, the U.S. was relying heavily on Taiwan and its TSMC company for chips. Of course, the U.S. also has domestic makers like Intel, but demand drove the private sector to seek creative solutions. Even Samsung, which has its own production foundry, is contemplating these shortages, and new projects and new demand require solutions.
In coverage by Larry Dignan at ZDNet today, Dell CFO Thomas Sweet predicts that component costs will be inflationary through Q2 and Q3 of this year. He pinpoints NAND solid-state storage components as being one primary cost driver.
“We will price that inflation — that input cost to increase as appropriate,” Sweet says, according to the story. “And we’ll watch to see if there’s any impact on demand. And that’s really the framework we’re going to have to work our way through as we go through the year.”
HP and Lenovo spokespersons also weigh in:
“Pricing is slowly going up,” Dignan quotes Gianfranco Lanci, chief operating officer of Lenovo, as saying. “And in order to maintain the profitability we need we continue to watch pricing. We want to be competitive of course, but pricing is slowly going up. I think we’ll continue to go up for the next 3 or 4 quarters because of the component cost trend.”
As for HP, Dignan quotes CEO Enrique Lores:
“We expect to continue to see very strong demand for PCs in the coming quarters. … We have provided strong guidance today both for the quarter and for the year … If we get more components, we could do even better.”
The chip shortage is something that we’ve had notice of for quite a while, and it makes sense that as vehicles continue to be built more and more like computers, requiring vast amounts of microprocessor manufacturing, there’s going to be a squeeze. The question is how long will it last. Don’t forget to factor this into any holdings you have in the tech manufacturing sector.
