Intel Announces CPU Price Hikes, Hopes to Spur Near-Term Purchases

According to a report by DigiTimes, Intel is having an oversupply problem with its best CPUs and wants to reduce supply as quickly as possible. As a result, Intel announced plans to raise CPU prices in the near future. This appears to be an attempt to push PC vendors into purchasing more CPUs now, in advance of the price increases, which would reduce the oversupply.

This strategy isn’t new and has been used quite often to accelerate sales when needed. However, the side-effect of this strategy is a noticeable reduction in sales later in the year, since PC vendors will have already bought up more supply than they need. Nonetheless, this strategy should theoretically allow Intel to reduce its oversupply issues, which seems to be the top priority for Intel right now.

DigiTimes sources note that Intel’s success with this strategy is unclear, but prices are believed to be rising for both consumer and server processors, as well as Wi-Fi chips later this fall. Success will depend on each vendor’s requirements, and how many additional CPUs each vendor will need or can use.

It’s unclear if Intel’s CPU price hikes will affect both the OEM market and the DIY market, but DigiTimes has not made a distinction between the two, so there is a chance it will affect both. That’s not all, as Intel also indicated it will be raising prices on its mobile processors to combat inflation and it has already notified its customers about the price changes. As a result, we could see notebook prices increase slightly in the near future.

Despite this, DigiTimes estimations say notebook volume in the 3rd quarter will increase by 14.3% quarterly thanks to reduced demand in the second quarter due to COVID restrictions in China, not to mention the impending back to school shopping season. This will especially impact Apple and HP, with expected 43% and 25% shipment increases thanks to a rebound from material shortages in Q2.

Intel’s price hikes have taken a bit of time to arrive. AMD reportedly considered increasing prices for its customers in late 2021, similar to what Intel is doing right now, but it backfired and vendors refused to comply with the higher prices. That also perhaps influenced Intel and led to it keeping CPU prices at low levels.

Now it looks like Intel will execute a price increase on all its processors near the end of 2022, despite material shortages evaporating. However, there’s also a chance it won’t happen, according to DigiTimes sources. These plans are projections and potential options, in other words. If anything, we will probably see a temporary price hike with Intel CPUs in the early fall, but then prices would drop into discount territory — just in time for Black Friday and the Christmas season.

Also note that upcoming Intel Raptor Lake processors are slated to launch in the near future. It’s not clear whether these reported price increases also apply to Raptor Lake, but logic would suggest that Intel will mostly want to clear out existing Alder Lake inventory in advance of Raptor Lake’s launch.

This post was originally published on this site