Cost Increases and Tariffs: ASUS to Increase MSRP on Graphics Cards and Motherboards
by Dr. Ian Cutress on January 5, 2021 5:45 AM EST
It is fairly easy to state that 2020 has had a deep effect on the supply chain mechanics of creating electronics and electronic components. Not only have there been logistical challenges in meeting regular levels of production, but the increase in demand due to work-from-home measures is putting additional strain up and down the ecosystem. On top of this, continued volatility with regards to trade and tariffs have been leaving more questions unanswered as to how companies involved in the results of all of this should engineer their operations.
To that end, ASUS has put out a statement through its public Facebook group stating that it will be increasing MSRP on components, with graphics cards and motherboards being highlighted as the initial targets, with more to potentially follow. The reasons for this are described in the post, made by long-time ASUS employee Juan Jose Guerrero III, are due to ‘increases in cost for components, operating costs, and logistical activities plus a continuation of import tariffs’. Guerrero goes on to say that ASUS ‘worked closely with our supply logistic partners to minimise price increases’.
The exact scale of the price increases will be borne through the next few weeks, as the price adjustments work their way through the supply chain to distributors and finally retailers. ASUS is a large scale production house for both AIB graphics cards and motherboards, and can often deal with economies of scale, so the fact that the company has chosen to be open about its MSRP increases should indicate that other similar businesses might have changes coming soon, if not already applied, given that the issue of component costs, logistics, and import tariffs are industry wide and not just limited to one company. ASUS highlights that these are two initial product lines, and ‘additional models may see an increase as we move further into Q1’.
Should an exact price differential list be made public, we will share it.
Source: ASUS PC DIY Group (Facebook)
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Peskarik - Tuesday, January 5, 2021 - link
hardlyPeskarik - Tuesday, January 5, 2021 - link
unobtanium just got more unobtaniumersilencer12 - Tuesday, January 5, 2021 - link
Wait for the new president to come into office and handle the tariffs. Then Asus will go back to normal.Koenig168 - Tuesday, January 5, 2021 - link
The Asus price hikes are already known. Around 10 to 20% for GPUs (didn't bother to look at MBs) e.g. RTX 3080 Dual bumped from USD499 to USD599.99. There is a list floating around the net or you can take a look at the Asus store which already shows the new prices.It may not just be Asus. Rumors are that the other manufacturers will be announcing their own price increases.
BenFish - Wednesday, January 6, 2021 - link
Freaking trump tax...BurntMyBacon - Wednesday, January 6, 2021 - link
The last major change in tariffs for electronics was a little over a year ago IIRC. I can't imagine that the industry player haven't already normalized their price structures as few of them are in a position to just eat the cost and fewer still would choose to do so willingly. Also, a few random google searches (view with skepticism) suggests that the 25% tariff tax would result in a ~3% increase in the price of the end product. While this is lower than I expected, keep in mind that the tariff doesn't apply to the end product pricing, but rather what comes out of China. Regardless of how accurate this estimate is, it should already be a known quantity and not play into any new price increases. On the other hand, repealing the tariffs would be a viable method for pushing prices back down a bit, though don't expect 25% drops at retail.More likely, supply chain complications due to the global pandemic played a role here. That said, I expect the price increases to be higher than would be needed to cover these costs for several reasons (I'll list the 3 most obvious to me). 1) Companies don't like to raise prices frequently (bad press) so they will raise them by larger amounts less frequently to avoid this. 2) Companies tend to like to hit certain price points. For instance USD599.99 is more desirable from a marketing standpoint than USD586.72. Though, this is less of a concern with lower priced products. 3) There are large numbers of cards being resold on auction sites at more than double the MSRP. This suggests that the price the market is willing to bear is higher than Asus and other manufacturers predicted. Since they intend to increase the price anyways, this is an opportunity for Asus to correct their pricing structure. While I'm an definitely not a fan of the poorly justified and disproportionate price increases, I also have to admit that I'd rather see Asus get the money than an eBay scalper. Of course, I'd rather see a higher percentage of the end cost go to the chip manufacturers as well.
BenFish - Thursday, January 7, 2021 - link
That's a lot of words! Thank you for analyzing and writing!I have a close friend who does the business of supplying cameras to security companies. The camera's CMOS chip, which made up the most of the cost, is from Korea or Japan, but the rest, for example, lens and assemble are from China.
However, due to the tariffs, he has to pay the full 25% extra cash, right when he receives the cargo from customs. While in the past, he usually can sell the cameras and then pay the money to his suppliers after a month.
In short, depending on where the porduct was last manufacted, the traiff can not only directly apply to final price that we have to pay, but also damage small businesses' cash flow.
damianrobertjones - Wednesday, January 6, 2021 - link
I hope that this heavily backfires on them. Th U.K. is in a bit of a tight spot, as is the rest of the world with Covid, so RAISING prices isn't helping anyone (other than Asus).ElectricalDingbat - Wednesday, January 6, 2021 - link
Narrator : It doesn't.Also it is very clear global supply chains are affected by the pandemic with several countries going under lockdown again.
lilkwarrior - Wednesday, January 6, 2021 - link
No; quite the opposite. It'll make it easier for those who really need the product to have it + them getting more ROI rather than scalpers. It's a win-win outside of budget-conscious consumers.Any stakeholder w/ common sense would have them increase their prices as a result of the tariff raises + the pandemic; the latter has been surprising lagging in impacting prices; maybe it's a legal reason but AMD/Nvidia should have long been raised their MSRP prices in the best interest of their stakeholders; Asus won't be the only manufacturer raising their prices because of the tariff increase.
It's convenient it's in effect for them to also understandably increase their prices accounting for the pandemic.