Consumers worldwide are facing a new wave of price hikes that could affect essential electronic devices, with recent economic reports predicting a 20% increase in the cost of smartphones, computers, and home appliances this year. These warnings come amidst radical transformations in the global technology sector, driven by the enormous demand for artificial intelligence technologies.
Chip shortages resurface
According to a report published by the Financial Times and reviewed by Al Arabiya Business, analysts and manufacturers have warned that inflationary pressures will force companies to pass on increased costs to the end consumer. The primary reason for this rise is a severe shortage of processor and memory chips, with experts predicting price increases ranging from 5% to 20%.
In this context, the newspaper quoted Jeff Clark, chief operating officer of a specialized company, as saying, "The company has never seen costs rise at this rate, and the impact will inevitably be passed on to consumers." A British computer manufacturer also described the situation as "painful," forcing it to raise prices since last December.
The impact of the artificial intelligence revolution on supply chains
To understand the dimensions of this crisis, one must consider the strategic shift in the semiconductor industry. The global race to develop generative artificial intelligence models and build giant data centers has created unprecedented demand for advanced, high-bandwidth memory (HBM) chips. This increased demand has led the world's leading chip manufacturers to shift their production lines and focus their investments on these expensive, highly profitable chips, at the expense of the traditional, low-cost semiconductors used in everyday consumer electronics.
Background of the crisis and its economic repercussions
These developments are reminiscent of the chip shortage that struck the world following the COVID-19 pandemic, but the current crisis differs in its causes; it is not due to factory shutdowns, but rather to a redirection of technological resources. This shift has led to a significant shortage of dynamic random-access memory (DRAM) chips, which are the backbone of operation in almost everything, from modern cars to personal computers.
As a result of these concerns, major companies have begun taking proactive measures. Winston Cheng, the chief financial officer of one of the largest appliance manufacturers, told Bloomberg Television that his company began stockpiling key components last November to avoid future inventory shortages and price hikes.
What does this mean for the consumer?
Consumers are expected to feel this impact firsthand when new models of electronic devices are released in the second half of the year. This will not only affect the initial purchase price but may also extend to maintenance and spare parts costs. This economic landscape suggests that the era of cheap electronics may be coming to an end, as the artificial intelligence revolution reshapes the global pricing map for the technology industry.
