Global Chip Shortage Could Inflate Smartphone Prices, Says Xiaomi

Smartphone OEMs are dealing with numerous obstacles in manufacturing new smartphones, and the biggest one is the global shortage of chipset. In the latest report, Xiaomi has hinted that the shortage could give way to inflation in smartphone prices. Xiaomi president Wang Xiang suggested the repercussion while discussing his company’s Q4 earnings.

And the issue is not just limited to smartphones; other industries, including gaming, computers, and automobiles, also face trouble. The chip shortage is why it has now become a complex deal to get access to a new Playstation 5 or Xbox or a new GPU by Nvidia.

Xiaomi’s president did not confirm that smartphone prices are sure to increase, but he did hint that the shortage is causing OEMs to revisit the issue and decide to increase the prices.

In a statement, Xiang said:

To be honest, we will do our best to offer the best price we can to consumers. But sometimes, we may have to pass part of the cost increase to the consumer in different cases.

Wang Xiang, Xiaomi

Wang’s statement indirectly clarifies that the shortage is causing an additional burden on the manufacturing process. To balance the extra manufacturing, the only step OEMs can take by increasing the price of the final product to avoid losses.

Companies Can’t Cover The Cost Gap For Long

global chip shortage
Credit: Bloomberg

The global chip shortage is increasing the cost of manufacturing smartphones. Of course, big brands like Xiaomi might be able to cover some of the cost gaps by absorbing the extra spending, but they won’t sustain the practice if the shortage persists. Sooner or later, the company will have to take the call.

Companies like Xiaomi are known for their budget-friendly pricing trends, but in an external issue like chip shortage, it won’t be able to avoid bumping the pricing of its smartphones and other devices. This means that the upcoming smartphones by Xiaomi might carry a higher price tag than the intended one.

Do you think Xiaomi will soon increase the pricing of its devices? If yes, what percentage of increase are we looking at? Can you take a guess? Share your thoughts with us in the comments.