Following the general trend of inflation, Intel announced a price increase of up to 20% on a variety of products

On July 14, Intel Corp. said it had begun notifying customers that it would raise prices for most microprocessor and peripheral chip products later this year due to rising costs.

According to media reports, Intel is preparing to raise prices this fall, including home computer and server CPUs, as well as peripheral products such as Wi-Fi chips. However, the specific price increase has not yet been finalized, but depending on the product, it may range from a few percentage points to 10%-20%.

Intel's move comes amid surging inflation in the U.S. and around the world. The U.S. Bureau of Labor Statistics released data on the 13th that the U.S. consumer price index (CPI) rose 9.1% year-on-year in June, hitting a 40-year high.

Demand for smartphones, PCs, TVs and game consoles weakened earlier this year, and major device makers have said inventories of unsold products are rising. Samsung Electronics has notified suppliers of a range of its products to stop shipping.

According to market research firm Gartner, global mobile phone sales will decline by 7.1% this year, and global PC sales will decline by 9.5%. Ranjit Atwal, senior analyst at Gartner, said: "The impact of geopolitical turmoil, inflation, currency fluctuations and supply chain disruptions , the global business and consumer demand for smart devices has declined, and the PC market in 2022 will also be severely affected.”

Intel, a leader in the chip market, warned of weakening demand and reiterated a bleak macroeconomic outlook. On its April 28 earnings call, Intel executives hinted at the upcoming price hike. Chief executive Pat Gelsinger said the company would "re-position its products to higher prices." Chief Financial Officer Dave Zimmer said the company is "looking to raise prices in certain areas in a targeted manner."

Looking at the entire semiconductor industry, the news about price increases in the past few months has not stopped. Part of the reason chip foundries are raising prices is because the current chip market is in a "seller's market" and manufacturers have a strong say in prices. At the same time, production costs are becoming more and more expensive. The cost of chemicals used in chip manufacturing rose 10% to 20%. Likewise, there is a shortage of labor needed to build new semiconductor facilities, and employee wages are rising.

In the current economic environment, chip prices may rise roughly in line with inflation, Forrester analyst Antonell said. In the past two years, the new crown epidemic has exacerbated the global chip shortage. Chipmakers face growing supply problems, exacerbated by the Russian-Ukrainian conflict. Market demand remains high, but supply is constrained. Chip manufacturing consumes a lot of electricity, and global energy prices are rising.