US chipmaker Qualcomm has confirmed that it is raising the price of its Snapdragon chips powering mobile handsets, with reports suggesting the increase could reach double digit percentages.
At a time when RAM chips and storage are making it more and more difficult for Android phone manufacturers and some PC makers to keep prices within the accepted realms of affordability, Qualcomm raising price it charges for CPU chips will likely send further shockwaves through an industry struggling to cope.
It means your favourite smartphone brand is going to have to pay more for the chips that power the phones and, let’s be real, they unlikely to absorb those costs themselves.
On Wednesday Qualcomm CEO Cristiano Amon said, as CNBC reports: “Costs went up prices are going to go up.” And the increases will begin September 1. The admission comes as the company saw a dip in its earnings due to a 20% drop in mobile handset chip sales. It still sold $5.1 billion in handset chip sales during the quarter, of course. So it sucks to be us, rather than them, I suppose.
“The semiconductor industry is experiencing a broad-based increase in input costs, across wafer fabrication, assembly, test, advanced packaging, memory and other materials,” Qualcomm reasoned in its release.
Amon mentioned a belief that fewer consumers are and will be shopping at the top end of the flagship market now. However he did express hope that the high supply costs might be “short-term”. Yet, we all know how inflation works. What goes up never goes down, it simply stops rising as fast.
He added: “Consumer preference within the premium category is changing towards a preference to the lower end of the premium, as well to last year’s phone, because of the memory price increases.”
“There’s also a change in gross margin because of the high supply cost that you’re all hearing about,” Amon added. “It’s a temporary, short-term thing we are addressing with price increases.”
The fact of the matter is, we might all be hanging onto that two year old phone for another year or two moving forward. And is that really the worst thing? What? I’m trying to look at the positives here?
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