Original article published on May 20, 2022 at 11:18 a.m.

Bad news if you plan to buy an electronic product in the coming months: prices will skyrocket. We already predicted this situation a few months ago (end of May 2022), following the release of information from Bloomberg. According to the media, Samsung and TSMC, the world’s two largest manufacturers of electronic chips, were preparing to increase the prices of their components.

In the first place, Samsung would raise prices for its semiconductors by 15 to 20% explained Bloomberg. The reasons for this increase are multiple and common to other sectors. In addition to the war in Ukraine, there is a rise in the prices of raw materials and freight, the shortage of components, the confinements in China and the explosion in demand.

Samsung isn’t the only one making this adjustment. The world leader in semiconductors TSMC announced to Nikkei Asia that it would also increase the prices of its chips at the start of 2023. At the Chinese giant the increase is less brutal, around 5 to 8%. But it has already made a first significant increase (20%) less than a year ago.

Automotive and high-tech: an inevitable price increase?

In a semiconductor market worth 580 billion dollars (2021 figures, a record), such an increase will not be without consequences for the end customer. TSMC has already announced that it would invest 40 to 44 billion dollars to increase its rate. This investment must be recouped.

Industrialists in the sector also have no means of putting pressure on the two founders TSMC and Samsung, for good and simple reason that they have unique know-how. In the absence of competition, difficult to negotiate.

And it is not Intel, which has just changed its strategy, which will change the situation for the moment. The American still has to set up the infrastructure to produce its semiconductors. A factory is not built in a day. The process is even longer with the shortage of components needed to manufacture the machine tools.

According to Bloomberg, the main market that will bear the brunt of this increase will be the automobile market. Already hard hit, the sector will still have to grit its teeth. But for how long ? If Tesla has found a solution by increasing its prices (fewer units but more expensive), the increase will have to stop before reaching the point of no return, where no one will be able to buy. Because inflation also and above all affects consumers.

The situation is also likely to become tense throughout the consumer electronics market. The processors needed to manufacture smartphones, tablets and PCs are produced by Samsung and TSMC. However, in this sector, the units are counted in the hundreds of millions. TSMC is also Apple’s main supplier. Not sure that a 15 to 20% higher price for the release of its iPhone 14 (next October) will delight consumers. Unless manufacturers absorb the increase by cutting back on their margins. There is no age to believe in Santa Claus.

PS5, iPhone 14 Pro, graphics cards, TV: prices are already rising

While inflation reached 5.2% in France last May (according to INSEE figures), predictions for the end of the year and the beginning of 2023 stand at nearly 10%. To afford a tech product, it will therefore be necessary to put your hand in the wallet more than reason. Smartphones that were just above 1,000 euros will now peak at around 1,500 euros. Sony has already announced an increase in the price of its PS5 in France (50 euros or +10%).

Graphics cards, automobiles, PCs, tablets, TVs, all tech products will be marketed at higher prices. While some brands have chosen (for now) to absorb inflation, most pass it on to the final price. Thus, the iPhone 14 Pro should display a price never seen before. This situation will be all the more complicated in France since the euro/dollar exchange rate is against us.

What to expect? For manufacturers who have chosen to absorb inflation, the situation could be beneficial. Wages not changing one iota, consumers will refocus their purchases on essential needs (food, housing, fuel, energy). As for tech products, the models with the best value for money should continue to work. Provided that inflation is not passed on. But that’s another story.