Smartphones today are more expensive than they should be. This is because of the rise in the cost of chips and other components. Now, as per a Bloomberg report, the cost of chips is going to go up further in 2023. A key supplier to TSMC (Taiwan Semiconductor Company), Showa Denko K.K., a Japanese chemicals company is expecting to raise prices further and cut down unprofitable product lines. There have been multiple hikes already in 2022. A lot of things, such as the supply chain issues which the coronavirus pandemic created as well as the Ukraine war, has led to the rise in the cost of components and chipsets.
Will TSMC Raise the Price of Chips?
If the cost of manufacturing the chips goes up significantly, TSMC’s profits will be squeezed if it keeps selling at the same rate. Thus, there is no doubt that the company will raise the cost of chips for customers in 2023 as well. This is also partly because of the very few players in the market who manufacture chips.
India is currently in the process of setting up infrastructure for inviting semi-conductor manufacturers into the local market. That would help with seamless smartphone and other electronics manufacturing ecosystem to be developed within India as the PLI (Production Linked Incentive) scheme is inviting TV manufacturing, semi-conductor manufacturing, display manufacturing, smartphone manufacturing and more locally.
The report mentions that Samsung and TSMC have already notified their customers that they intend to raise the price of chips. A rise in chipset costs will ultimately hurt the end consumers as they will have to pay more for smartphones and other electronic goods. Consumer electronic manufacturers were cutting down on other quality aspects of their products to accommodate the expensive chipset in the product and still keep its price in check. Just how big a hike it would be is something that we are yet to see.