Intel Allegedly Raising Prices in the Future to Reduce Abundance of Chips

In a move that can best be described as “a bold strategy, Cotton” Intel is rumored to be planning a future price hike. This adjustment is supposed to help it eliminate its partners’ excess inventory. That includes CPUs for consumers and enterprise, along with Wi-Fi chips. The plan is to tell its partners prices will be going up soon, with the hope they buy more chips now.

News of Intel’s plans comes from Digitimes, so as always a grain of salt must be ingested. Tom’s Hardware says this strategy isn’t new, and could succeed, at least in the short term. However, it might also just push the can down the road. If partners buy a plethora of parts now, they could end up with excess inventory once again a few months from now. As an example, when Intel launches Raptor Lake, partners might have a tough time moving some Alder Lake parts unless they slash prices. Digitimes sources don’t say what kind of price increase Intel is eyeballing, or when they might take effect. It’s also not clear if this will only affect the OEM market, which includes system integrators. It might also impact the DIY upgrader market as well, which is the retail portion of Intel’s portfolio.

Intel has reportedly already notified customers it’s raising prices on its mobile processors. This is due in part to fears of rising inflation. In other words, order what you can now before things get really expensive. This could lead to more expensive laptops in the fall, right when kids are going back to school. AMD allegedly tried to do this as well at the end of 2021. However, its customers balked at the new prices and AMD backed off. Intel followed suit back then, and chose to keep prices low as well. That strategy is no longer viable, apparently, as it has too many CPUs in the channel currently.

Though there’s a possibility of Intel’s plan backfiring, it also might just work. Digitimes reports laptop sales fell in the second quarter, but are expected to increase in the third quarter. This is mostly due to COVID-19 lockdowns in China being lifted. There’s the aforementioned back to school period as well. A shortage of supplies is also reported to be improving. Digitimes says Apple and HP both anticipate a boost in laptop shipments for Q3. Apple plans to ship 43 percent more notebooks, and HP hopes to move 25 percent more.

All of this brings about an interesting and unanticipated scenario. The chip shortage might end with a deluge of products sitting on shelves. On top of that we have high inflation, and economic uncertainty looming in the future. This confluence of events seems to have created an unexpected abundance of inventory across the PC space. As we all know, it’s also happening in the GPU market too. Though that’s the result of GPU mining dying off as opposed to the materials shortage easing up a bit. However, it’s clearly causing issues for a lot of companies who are trying to map out the road ahead. AMD, Intel, and Nvidia all have big launches coming up, with excess inventory on their hands.

Nvidia is clearly taking the route of slashing prices, but AMD has yet to follow suit. Intel’s strategy is quite different. Interestingly Digitimes previously reported that Intel was planning on cutting Alder Lake prices in the future, not raising them. The reason was due to economic uncertainty. It actually marked the second price cut Intel had allowed for Alder Lake, which is an unprecedented move. Previously it had only cut prices on prior generation hardware, not its current offerings. These rumors point in different directions, so keep that in mind when you consider what’s likely going on.

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