Intel Purportedly Planning to Hike Prices — Report

News
By Anton Shilov
published

CPUs and peripheral chips set to get more expensive.

Intel Alder Lake Mobile CPU
(Image credit: Intel)

According to a report on Nikkei Asia, Intel has informed its clients about its plans to raise prices on its processors and peripheral chips this fall. "According to three industry executives with direct knowledge", the alleged root cause of rising chip production costs are the surging costs of electricity, raw materials, transportation, and labor. Inflation is also seen as another factor that requires Intel to hike its prices. Take the news with a pinch of salt for now.

According to the report, Intel plans to raise prices on virtually all of its products, including processors for client PCs and servers, Wi-Fi chips, and various controllers. The possible hikes could vary on a product by product basis. From a minimal single-digit increase to 10% – 20% on some SKUs. 

Among the products that could be more expensive this fall are 'flagship' CPUs for desktop and notebook PCs (which are among the best CPUs for gaming) and servers, which will have a significant impact on PC makers, server suppliers, and even operators of hyperscale datacenters that buy tens of thousands of processors.

According to Nikkei Asia, Intel confirmed that it had started to inform its customers about impending price hikes, but declined to comment how significantly the company will increase them.

"On its Q1 earnings call, Intel indicated it would increase pricing in certain segments of its business due to inflationary pressures," a statement by Intel published by Nikkei reads. "The company has begun to inform customers of these changes." 

Intel produces the majority of CPUs for client PCs, embedded systems, and servers. In addition, the company is a leading supplier of Wi-Fi, Ethernet (both for client systems and datacenters), FPGAs, and many other products. A major price hike by Intel will inevitably affect the whole industry given the wide range of products its supplies to thousands of its customers worldwide. 

What remains to be seen is whether other industry leaders will also raise their prices following Intel and citing similar reasons. Companies like AMD, Nvidia, Xilinx (now part of AMD), Marvell, Realtek, Phison, Silicon Motion, and many others serve the same or adjacent market segments and experience the same problems as Intel. So, if the giant company increases its quotes, its rivals may choose to maintain their prices, sell more and grab some market share from Intel; or increase their pricing without any fear of losing market share to the blue chipmaker. 

Intel reports its Q2 2022 on July 28, so this is when we might here some additional information about incoming price increases.

Anton Shilov
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

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19 Comments Comment from the forums
  • digitalgriffin
    Possibly Intel knows that the 13900K will beat out what AMD has with Zen 4? Top dog always sets prices. Intel's never been afraid to sell things at cost if competition is tight.
    Reply
  • InvalidError
    As if Intel and other high-value chip manufacturers didn't already have plenty fat enough profit margins to buffer the rising costs if they actually wanted to. Wallstreet sees the insane net profit margins getting brought down to more normal-ish net profit by rising costs and won't take that lying down, got to push some inflation of their own and pain on their customers. Nothing can be allowed to interfere with their infinite greed.
    Reply
  • octavecode
    China might join the game soon....you never know
    Reply
  • cyrusfox
    When fuel prices double to triple in price, all prices will rise, logistics, raw materials, everything is on the up, worst inflation in 40 years. Goodbye sub $100 Motherboards and GPUs... Intel CPU's will sell for what the market will bare, i9 in premium space, i5 and i3 for a bargain comparatively(Price performance vs competition).

    Everyone is making this move it isn't just Intel.
    Reply
  • InvalidError
    cyrusfox said:
    When fuel prices double to triple in price, all prices will rise, logistics, raw materials, everything is on the up, worst inflation in 40 years.
    When companies making 20+% NET profit instead of the usual healthy 10-15% decide to raise prices some more to maintain their excessive profits instead of eating the inflation, all you get is a market where everyone wants 10% higher wages and benefits to afford the 10% higher profit margins, rinse and repeat until the whole economy collapses from finding out the hard way that it priced itself too far above what normal people can afford. Keep in mind that there will be a few years lag between companies raising prices and the market finding out it cannot sustain it.
    Reply
  • digitalgriffin
    InvalidError said:
    When companies making 20+% NET profit instead of the usual healthy 10-15% decide to raise prices some more to maintain their excessive profits instead of eating the inflation, all you get is a market where everyone wants 10% higher wages and benefits to afford the 10% higher profit margins, rinse and repeat until the whole economy collapses from finding out the hard way that it priced itself too far above what normal people can afford. Keep in mind that there will be a few years lag between companies raising prices and the market finding out it cannot sustain it.

    Sad but true. I know a company that raised their cost of products by 30% in one year. And did they give their employees a portion of that? Newp. Only option is for my friend to get a new job asking for higher wages to deal with inflation.
    Reply
  • spongiemaster
    InvalidError said:
    As if Intel and other high-value chip manufacturers didn't already have plenty fat enough profit margins to buffer the rising costs if they actually wanted to. Wallstreet sees the insane net profit margins getting brought down to more normal-ish net profit by rising costs and won't take that lying down, got to push some inflation of their own and pain on their customers. Nothing can be allowed to interfere with their infinite greed.
    Telling companies to absorb much higher productions costs is about as dumb as telling oil companies to sell oil below the market price because gas is expensive. No one was crying for oil companies during Covid when global demand fell off a cliff and the cost of oil went negative. Intel's margins have been eroding for years to the delight of the internet mob. Wall Street has not been impressed by Intel's profit margins. How on earth did AMD have a higher market cap than Intel earlier this year? Intel isn't going to look at that and conclude everything is going great, let's lower margins even more, that will make investors happy. How many billions is Intel spending in Ohio and Germany and Arizona and where ever else they are building fabs? Where is all that money going to come from?
    Reply
  • InvalidError
    spongiemaster said:
    Telling companies to absorb much higher productions costs is about as dumb as telling oil companies to sell oil below the market price because gas is expensive.
    Oil and gas aren't that expensive, prices go up almost entirely because the companies are inflating their profit margins and screwing up the whole economy as they do so for their own personal profit. That is what happens when you have loosely regulated oligopolies running critical parts of the economy unchecked. Those oligarch billionaires don't care, their oil&gas stock prices will inflate with the inflation and that helps with keeping the unwashed masses perpetually in indentured slaves status.

    If the entire economy attempts to raise costs to sustain unsustainable profit margins, everyone's costs go up disproportionately, then everyone needs to raise prices disproportionately to maintain unsustainable profit margins, then everyone has to raise prices again, rinse and repeat until the economy collapses because it priced itself out of existence.

    For hyper-inflation to stop, companies and their shareholders have to accept lower, more sustainable profit margins. Governments need to step in and set a ceiling on oligopolies' net profit margin to stabilize the whole thing instead of having a ~10 years boom-bust cycle..
    Reply
  • kjfatl
    InvalidError said:
    As if Intel and other high-value chip manufacturers didn't already have plenty fat enough profit margins to buffer the rising costs if they actually wanted to. Wallstreet sees the insane net profit margins getting brought down to more normal-ish net profit by rising costs and won't take that lying down, got to push some inflation of their own and pain on their customers. Nothing can be allowed to interfere with their infinite greed.
    How fat are the margins? A quick glance looks like 32 billion dollars/yr. Seems huge??
    They need to spend about $40 billion this year just to keep up with TSMC, and another $100 billion if they want to get ahead of TSMC. They are basically 3 years away from bankruptcy if they stumble.
    Reply
  • InvalidError
    kjfatl said:
    How fat are the margins? A quick glance looks like 32 billion dollars/yr. Seems huge??
    24.6G$ NET income on 77.7G$ revenue, that's 31.7% net income. That isn't three years from bankruptcy, that is four years to simply shrug off a 100G$ new fabs investment not counting increased revenue from all of those extra wafers.

    Even if Intel ate the first 10% of its costs, it'd still be over 20% net. Before the 2000s' infinite greed went full-throttle, 10% was considered good and 15% great. Net margins in excess of 20% rarely exist outside monopolies and oligopolies.
    Reply