The Electronic Components Market: An Overview
We are living in the golden age of technological innovation and the electronic components industry is a big part of it. A large number of consumer products today – smart phones, computers, gaming consoles, electric vehicles, fitness devices, virtual assistant devices, and much more – rely on a consistent supply of electronic parts. It’s important that this industry continues to grow steadily and is supported by effective supply chains across the world.
After much upheaval during the last three years due to the COVID-19 pandemic, the global electronics market is still going strong. After being valued at $499 billion at the end of 2021, it is now predicted to reach $529.86 billion by 2028, which shows its lasting power.
Demand for IT Equipment and Computer Parts Has Skyrocketed
PC gaming has always been huge. The market generated almost $36 billion in 2021, driven by enthusiastic gamers across the world. Due to the pandemic, which forced billions of people to stay at home, demand for gaming hardware has skyrocketed – at a time when supply chains were disrupted and are still recovering.
As you might already know, many die-hard gamers spend a good amount of money on desktops, peripherals, and other hardware. A respectable percentage of them also like to build their own computer systems instead of buying a pre-built, new device. Although pre-built PCs are more accessible, they are usually costlier. Also, building your own computer is kind of considered a rite of passage among hardcore gamers. It offers room for more customization, both in terms of hardware, data security, and aesthetics.
What does this have to do with demand and supply of PC components? Well, most PC gamers like to upgrade their hardware components every 3–4 years for better gaming experience. And who can blame them? More powerful hardware with exciting new features is always entering the market, giving players access to titles with more sophisticated specifications.
An example is ray tracing and deep learning super sampling (DLSS) enabled graphic processing units (GPUs). Most of this hardware – especially GPUs – can also be used for video editing, machine learning, and many other intensive work practices.
This means that demand for major computer components is constant. With the ongoing shortage of semiconductor parts, supply for most PC hardware components is estimated to remain scarce for the foreseeable future.
Why Are Computer Parts Getting More Expensive?
Computer components are always in great demand and short supply, so their prices reflect that. However, there are several other factors that are impacting the purchase price in recent times.
Chip Shortages
The chip shortage has caused major issues for consumers and businesses. Manufacturers of computer parts are experiencing a shortage of memory cards, motherboards, chips, and other components due to the exponentially increasing demand from various industries. This has pushed up prices of items such as smartphones, printers, laptops, computers, and other gadgets.
As the industry rushes to plug supply gaps (brought on by COVID-19) and meet rising demand, prices continue to snowball their way through key materials and suppliers in chip making. This has led to most of the chip makers around the globe raising their prices and ultimately, the consumers feeling the pinch.
The situation was way worse in 2020 and 2021, and has somewhat normalized in 2022. Popular models of some gaming computers, laptops, and electronic goods became more expensive in 2021. For example, one of the world’s bestselling gaming laptops made by ASUSTek Computer Inc. previously sold for $900, but rose to $950 last year. HP’s Chromebook also rose from $220 to $250 at around the same time. In fact, HP increased their prices across the board by 8% in 2021; the brand’s CEO specifically cited chip shortage as the reason behind that decision.
If you’re wondering what’s causing the chip shortage, it’s because unlike most factory-made items, microchips or semiconductor chips have to be created in extremely controlled environments, which are referred to as “fabs”. These facilities are custom-built from the ground up to prevent unwanted changes in static electricity or temperature, factors that irreversibly damage semiconductors inside the chips.
A high-quality microchip production cycle can take several weeks to complete, if not months. Add this factor to the economic hardships, labor shortages, and other hurdles manufacturers were facing due to the pandemic, and you’ve got yourself a significant shortage of chips.
Pandemic-Related Supply Chain Disruptions
This goes without saying, but it deserves to be mentioned here: the pandemic-led supply chain disruptions proved to be quite a challenge for manufacturers. On one hand, there were people confined to their homes, with nothing else to do but spend most of their time on their computers. On the other hand, there were manufacturers struggling with keeping up with the sudden increase in demand for CPUs, GPUs, and hard drives coupled with labor and raw material shortages and disruptions in shipping and distribution.
People also seem to be upgrading their computers more frequently than ever before. A big reason for that might be the work-from-home culture that has become the new normal. Manufacturers have no choice but to increase their prices to cover the costs of ever-growing need for new parts and increasing production rates.
Trade Tensions Between US and China
In September 2020, the US government imposed limitations on the Chinese giant Huawei, banning the company from buying or acquiring electronic components with American technology or chips made by international companies that use American systems. This also made the chip shortage worse as Huawei accelerated its chip-buying processes. These sanctions also led other Chinese manufacturers to distrust the US government, unexpectedly increasing the demand as they anticipated their chip buying processes.
How the Chip Shortage Is Affecting the PC Industry
Chips and graphics cards are two items that are widely used in all sorts of electronics, and unfortunately, both have fallen victim to shortages induced by the pandemic. In addition to computers (i.e., laptops, PCs, tablets, smartphones, etc.), smart appliances like refrigerators, dishwashers, and laundry washers also utilize semiconductor chips. Not to mention pretty much every car manufactured in the last decade almost completely relies on microchips to operate smoothly. People who mine or use cryptocurrency are also feeling the effects of the semiconductor shortage since many coins are built with microchips.
The global semiconductor shortage hit the automotive industry the hardest – a modern car consists of as many as 150 microchips that control everything from turn-by-turn directions to engine timing. Experts blamed the chip shortage in the automobile industry on the rapidly growing demand for electronic products, especially during the pandemic.
How? Desktop computers were previously on the verge of a slow death with sales of mobile devices and laptops. But in the first quarter of 2021 alone, the worldwide PC market saw an increase of a whopping 55% – the highest it has been since 2010. This is largely because the pandemic forced employees to work from home students to adopt virtual learning.
Gaming consoles also experienced a rise in demand. According to the Fortune Business Insight, as of May 2021, gaming consoles market is on the way to achieve the annual growth rate of 5.3% over the next 5 years. The revenues are expected to reach $51 billion by 2027. With the increasing popularity of gaming PCs and consoles, comes the higher demand for sensors and semiconductors. Companies like Intel have actually predicted that may take several years before the chip shortage can be effectively addressed.
The globalization of this industry has also resulted in manufacturers in emerging economies making a higher-quality computer part at a lower price compared to those in more developed nations.
In the meantime, the chip shortage is leading to an increase in prices for consumer electronic goods, which means more people are finding it hard to buy good-quality PC parts. That being said – buying used computers parts online is much cheaper than buying them brand-new from a store.
The chip shortage will not last forever; it has already started waning off now. If you are a video game player, you may have experienced this problem with delays in the output of the most recent Xbox and Playstation consoles, but the good news is, you won’t have to deal with it for much longer.
Sell Your Used IT Hardware and Components Online
Finding the best places to sell computer parts (especially old and used) can be a bit overwhelming. The rate at which computers and their components (CPUs, GPUs, HDDs, etc.) are advancing can sometimes make it necessary to upgrade your entire system every year. And if you have updated any hardware on your system in the past few years, you’ve probably ended up with various spare parts. Rather than sitting back and letting the extra IT equipment or hardware collect dust, why not trade in and see some return on investment?
SellGPU is a leading semiconductor and computer equipment buy-back company in the US, providing an environmentally friendly way for small- to medium-sized businesses and individual users to offload some equipment. Our ITAD company (IT Asset Disposition company) regularly buys used IT equipment from users (personal and commercial) in single and bulk quantities. We then find buyers for those components across various secondary channels to maximize their ROI.
If you have multiple computers, extra IT hardware, or surplus enterprise equipment that you’re looking to sell, visit our website to get a quote. Our payment turnaround is super fast –once we receive and test your components, you’ll receive the agreed-upon fair price for them within 3 days via your preferred payment option. The whole process is hassle-free: we send you a prepaid shipping label and packing box so all you need to do is pack it up and drop it in the mail. You deal directly with out technical team without any middlemen to eat into your profits.
To request more information or a competitive quote, please call us at 1-888-312-3003 or send an email to info@sellgpu.com.