As Fall grows closer and the buzz around this year’s slate of flagship smartphones grows louder, some rumors have begun to swirl that the iPhone 13 line could launch with much higher price tags than prior iPhone models. It’s no secret that smartphones have been getting more expensive: just five years ago, the idea of a $1,000 phone would have been unbelievable.
Now, however, it’s stranger to see a flagship phone that comes in under $1,000 than one that spikes over that value. Recent difficulties in electronics manufacturing have many analysts worried that the price of devices like smartphones could be shooting up to new heights soon.
An unfortunate confluence of factors has coalesced to push microchip manufacturing to the brink. A combination of lockdowns due to the global medical situation and labor shortages from that same medical reality has made chips extremely difficult to manufacture. This has been compounded by the extremely high demand for new electronics over the past 18 months, which has devastated the supply of chips that have been able to make it off the factory floor during the manufacturing squeeze.
This extreme squeeze led to microchip manufacturer TSMC promising its biggest clients, Apple and the automotive industry, that it would prioritize its orders over the orders of other clients. However, the supply has allegedly become so constrained recently that the increased production costs will be passed along to customers, starting with Apple’s newest smartphones.
This is in spite of the fact that TSMC isn’t expected to increase its chip prices until at least January 2022.
The shortage is expected to bleed over well into 2022, according to experts with knowledge about microchip manufacturing. The main issue facing the industry is that essentially every electronic device on the planet needs microchips, and demand for consumer electronics is higher now than ever before. This means that there is little room for any manufacturer to catch up to demand.
Rather than wait for the price hikes to hit on their end, Apple will likely opt to up the prices of the iPhone 13 preemptively. This will allow them to immediately build up a bit of reserve with which to buy the more expensive chips and could prevent the inevitable PR disaster of having to hike the price of their newest phones a few months after release.
In short, consumer electronics are likely to get more expensive and stay expensive in the near future.