Chip shortage forces Samsung to raise component prices

We are still amid a global supply chain shortage when it comes to electronic devices. Everything from cars to laptops to smartphones are getting delayed, rolling out in fewer numbers, or missing features you would have expected.

Unfortunately, this problem isn’t going away. Now, in response to the global chip shortage, it appears Samsung is ready to make some big changes. According to a report from Bloomberg, Samsung could be prepping price hikes as high as 20% for components it creates.

See also: The best Samsung phones

Although Samsung is the world’s largest smartphone manufacturer, it doesn’t keep all its manufacturing abilities to itself. Many companies — including Apple — rely on Samsung for fabricating components that end up in various products. It appears Samsung is ready to start charging more money to help cover its increased costs dealing with the chip shortage.

Eventually, these increases will trickle down to you, the consumer. If companies need to pay Samsung more to build their products, those products are inevitably going to become more expensive.

Chip shortage could have a harder effect on star products

Over the past year, Samsung has left its component pricing relatively stable. However, pressure from all sides — the war in Ukraine, China lockdowns, supply chain shortages, etc. — is forcing the company to respond. Other companies, such as Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp., are also raising prices. It was only a matter of time before Samsung, one of the biggest players, did the same.

This will have two major effects on you, the consumer. First, companies that can afford to pay even the highest price hikes will do so if it ensures they can get their star products out on time. A company with deep pockets — Apple, for example — would rather pay heavily increased component prices if it means the next iPhone is out when consumers expect it to be out. This will mean those big companies will likely significantly increase prices for their high-profile products in the short term.

The second effect is that, overall, pricing for electronics is going to start creeping up as well. You shouldn’t expect a 20% increase overnight, but increases are inevitably on the way as companies need to earn more profits to cover these higher expenses.

It will likely take months before consumers feel these increases. However, with the global chip shortage not going away anytime soon, who knows what else might be in store for us.