It’s not a secret that smartphones are getting more and more expensive each year, and this ominous trend could get even worse in 2023. According to the latest estimates, the world’s largest dedicated chip foundry TSMC is planning to hike its prices by 6% in 2023.
First information about the potential price increase started to appear back in May this year but now TSMC has decided to go through with the suggested increase. Back in 2020, TSMC announced another price hike which saw manufacturing costs rising up between 20% and 40% for some clients.
The latest increase in prices is not that drastic but there’s another factor to be taken into account here. Last year, big smartphone brands tried to do their best not to bump up the end prices for smartphones in order not to lose market share.
Some companies such as Xiaomi were forced to cut promotion and marketing budgets in order to keep smartphone prices at bay but they can stretch up to a point, especially if these companies want to steer clear of cutting jobs and other more drastic measures.
Will smartphones become more expensive in 2023?
According to one Counterpoint research, in 2021 we saw a 10% YoY increase in the average sale price for smartphones in North America, mainly due to increased shipping and component costs. All factors considered, this year-on-year increase probably doesn’t fully account for the 20%-40% price hike from TSMC.
Another variable in this equation is the concrete type of silicon. While TSMC is focusing on efficiency in order to stay profitable, new 3nm and 2nm nodes will probably account for most of the additional manufacturing cost.
(Image credit - Counterpoint Research) 10% YoY ASP increase in first three quarters of 2021 due to increased shipping and component costs
If we continue this train of thought, it’s plain to see that flagship smartphones are most likely to get more expensive in 2023 and in the years to follow, as big companies such as Apple and Samsung are striving to put these new chips in their flagship devices.
On the other hand, midrange and low-tier chips are not only easier and cheaper to manufacture but due to the fact that they don’t require cutting-edge technology and are readily available, most companies have already stockpiled chips for their midrange phones.
Long story short, we might get a slight increase in prices of top-tier, flagship phones but on the other hand, this might lead to a desire to offset the price hike in midrange and low-tier models. So, the Galaxy S23 price might be a bummer but we might get an even better bang for the buck on the next Galaxy A54 5G.
Mariyan, a tech enthusiast with a background in Nuclear Physics and Journalism, brings a unique perspective to PhoneArena. His childhood curiosity for gadgets evolved into a professional passion for technology, leading him to the role of Editor-in-Chief at PCWorld Bulgaria before joining PhoneArena. Mariyan's interests range from mainstream Android and iPhone debates to fringe technologies like graphene batteries and nanotechnology. Off-duty, he enjoys playing his electric guitar, practicing Japanese, and revisiting his love for video games and Haruki Murakami's works.
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