Xiaomi warns of possible price hike on smartphones due to chip shortage!

Xiaomi’s president Wang Xiang recently stated that the global chip shortage was increasing the company's costs so there may be a price increase soon.

File photo of Xiaomi Mi 11

Xiaomi will still optimize the cost of its hardware devices even with the shortage

The ongoing worldwide chip shortage since 2020 has continued as mobile manufacturers continue to struggle with higher production costs. This shortage was caused by several factors and that includes COVID-19, sanctions against key Chinese technology companies, and poor anticipation of demand.

Originally, the automotive industry received the blow of this crisis in chips but it eventually included all types of chips. It even caused some production plants in the US and other places to close.

A few months ago, there are movements to boost production but the chipmakers still hardly can keep up with increasing demands. Because of this, phone makers are now feeling the impact of this phenomenon since the costs continue to increase. 

According to Xiaomi’s president Wang Xiang, his company has been grappling with increased production costs due to the shortage of semiconductors needed for smartphones. This can lead to higher selling prices of many upcoming devices. 

However, he pointed out that Xiaomi will still offer competitive prices by finding ways to optimize its production processes. He added,

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.

Although Xiang admits that there's pressure on their part, he assures the investors that the company is still doing okay. He shared that Xiaomi posted a 24.8 increase in revenue during the fourth quarter of 2020. Meanwhile, its adjusted net profit went up by 36.7 percent.

There are predictions that the present global shortage may persist until the end of 2021 and the inflation might heavily affect consumers.

Sources: Gizmochina, Reuters