Laptops and other consumer devices are getting more expensive.
That may be one of the few end market signals that gets more people to understand the growing semiconductor shortage and what it means for markets.
Kate Duffy at Business Insider reports today that laptop makers and manufacturers of other devices like smartphones are passing on costs around an average of $50 to customers based on the prices that they have to pay for processing chips. Duffy quotes Dell’s Thomas Sweet as citing “component cost increases” in current sticker prices for your laptops.
HP laptops, according to the reporting, are up 8% in cost, and the company’s printers cost 20% more on average.
As for the causes of the semiconductor shortage, it looks like a perfect storm. First, there were the wild swings of market activity caused by the pandemic, where demand sank in 2020 and is spiking now in 2021. To that point, semiconductors are not the only commodity with a scarcity in today’s markets – from lumber and gasoline to all sorts of other staples, buyers are seeing price premiums due to shortages.
Then there’s also the major demand for electric vehicles and other modern cars that look and function more like computers. All of those cars need a lot of new processing chips, and that’s squeezing markets for traditional chip devices like gaming consoles.
The trade instability experienced over the last four years with worsening U.S./China trade relations probably didn’t help either.
“We don’t even produce vital medical equipment in our own country,” says Saagar Enjeti in a recent Reddit-heralded rant on why shortages are happening, in which he cites the just in time inventory model as a major factor. “We actually make (much of what we need) in China. America is unable to deliver the most basic customer goods to its populace.”
The bottom line is that you’ll soon see very concrete evidence of the semiconductor shortage in stores near you. Meanwhile, Intel and other domestic manufacturers are trying their best to spur scaling projects to build more chips in the U.S. We’ll see how that goes.
