September 20, 2021

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Get ready to pay for more expensive smartphones next year

Processor chip soc

Robert Triggs / Android Authority

TL;DR

  • Higher production prices could further compound the global chipset shortage going into 2022.
  • Per a new report, chipmakers will increase manufacturing fees next year, leading to pricier chipsets and devices that employ them.
  • This could mean that smartphones, computers, and other electronics could cost more going forward.

The global chipset shortage has had a profound impact in 2021, with some OEMs struggling to meet demand in the wake of the pandemic. But this crisis could take a turn for the worse, especially for consumers. A new report suggests that chipsets, therefore smartphones, could be further compounded by higher prices as increased production fees come into effect next year.

According to a Nikkei Asia report, Taiwanese semiconductor firm TSMC — the manufacturer of chipsets used by Apple, Qualcomm, and Nvidia — is set to hike its production fees by as much as 20% in 2022. The increase is reportedly due to several factors, from overwhelming demand and logistics to the race for smaller manufacturing processes. These pressures are being felt by other chipmakers, too.

The report also suggests that Qualcomm and MediaTek‘s cost of sales have ballooned by 60% and 64% between October 2020 and June 2021. This inflated cost, alongside the shortage, will likely have a knock-on effect for consumers, who may have to fork out even more for electronics. Smartphone and computer companies reliant on these chipset firm’s products will likely have to spike costs to recoup losses.

Higher prices, more flagships

The spiking prices could also affect smartphone companies’ product lineups too. Nikkei, quoting a Counterpoint analyst, suggests companies may release more high-end products to offset their losses. This would mean fewer new mid- and lower-range devices available to budget-limited consumers.

Interestingly, increased smartphone prices haven’t been a hot topic in 2021 as in the past. The likes of Samsung actually lowered the price of some of its flagship this year compared to the last. The Galaxy S20 series started at $999 in the US, while the Galaxy S21 arrived at $799. It’s possible that the Galaxy S22 won’t continue this trend. Notably, Google also confirmed that its upcoming Pixel 6 Pro would be “expensive.”

It’s unclear how much rising chipset costs will impact smartphone prices or whether OEMs would be willing to take a larger hit to shield consumers. Nevertheless, you might be counting a few more pennies to afford that new flagship in 2022.