We rely on computers for almost everything in our lives today – for work, entertainment, shopping, communicating with friends, gaming, and so much more.
So rising prices for PC parts can be a cause for concern for many people. Like many others, I wanted to know why PC parts are so expensive and did some research. Carry on reading to see what I found!
Why Are PC Parts So Expensive?
1. The Components Are Expensive
The prices for PC parts are rising rapidly now, but the cost of components like CPUs and GPUs has always been high, which is due to the high cost of materials and manufacturing.
Also, research and design, fabrication, testing, and freight costs add to the high prices of PC parts.
2. There Is A Worldwide Chip Shortage
There has been a worldwide chip shortage since 2020, which has led to increases in the price of PC parts, which is one of the effects of the pandemic that will probably last for a while.
In 2022, leading chip manufacturer, TSMC announced that it would be raising prices by as much as 20% due to pandemic-related shortages and the higher costs of materials, freight, and logistics
3. High Demand For PCs
At the same time that there is a shortage of PC parts, the demand for PCs continues to rise, leading to higher prices.
Even though the pandemic is over, a large proportion of the workforce continues to work from home.
Also, cryptocurrency mining and gamers contribute to the higher demand for PCs.
So far, production has not increased to keep pace with the rising demand. Overall, you get rising prices when higher demand intersects with a more limited supply.
4. Crypto Boom Increases Demand For PCs
Some commentators on Reddit have suggested that prices for PC parts jump every time there is a boom in cryptocurrencies.
That said, mining for cryptocurrencies leads explicitly to an increased demand for high-end graphics cards.
Further, people who mine don’t just use one computer but have whole banks or even farms of computers lined up, adding to the growing demand for PC parts.
Increased demand due to cryptocurrency mining was already happening before the pandemic and has intensified since people have increased the activities they do remotely from home.
5. Shortage Of Materials
Besides chips, other materials for PC parts like copper and rare earths are also in short supply.
That said, this is because all mining and shipping activities were either shut down or slowed and have not yet picked up again.
On the other hand, office work has resumed and reached pre-pandemic levels, increasing demand that manufacturers cannot keep up with.
However, there are signs now that supply chain issues are being resolved.
6. Materials Are Sourced From Many Locations
One reason PC parts are so expensive is that they may need components sourced from as many as a dozen different countries.
For example, TSMC, a leading chip manufacturer based in Taiwan, relies on materials from the Dutch company ASML, which operates in Europe, Asia, and the US.
So, bringing together all the components to make PC parts incurs shipping and logistics costs.
7. Investment In Research And Development
One of the significant characteristics of contemporary technology is constant innovation.
Therefore, PC manufacturers have to invest large sums in research and development to stay competitive.
Further, this is a continuing investment, including salaries for top programmers and engineers.
Also, companies have to pay high salaries to attract top talent for these roles, which is one of the costs of manufacturing PCs that shows up in the final price.
8. Cost Of Materials Is Rising
Materials for PC parts have always been expensive, and prices are rising due to shortages and disruptions in the supply chain following the pandemic.
Further, US tariffs on goods produced in China have increased the cost of PC parts like GPUs, motherboards, SSDs, power supplies, and cases.
9. Labor Costs Are High
Manufacturing PC parts requires skilled workers who are paid high salaries.
During and after the pandemic, there has been a labor shortage, as people have been slow to return to the workforce.
Of course, this adds one more bottleneck in the production process, pushing up prices.
10. Manufacturing Costs Are High
Besides materials, search and design, and labor costs, manufacturing costs for PCs include building and operating the factories where the components are built.
That said, setting up a manufacturing plant for PC parts can cost a billion dollars.
Also, maintaining the facilities and upgrading equipment to keep up with the newest technology is another expense that adds to the cost of PC parts.
Further, the manufacturers do extensive testing to ensure every system works as it should, adding to the total costs.
11. Supply Chain Problems Due To The Pandemic
As we saw above, sourcing the components for PC parts has always been a complex process, bringing together the different pieces from various locations worldwide.
That said, the pandemic has disorganized and slowed supply chains almost to breaking point, and the PC manufacturing industry has been hard hit.
Even though the pandemic has ended, it isn’t easy to quickly bring the production process back up again.
Once production shut down, parts manufacturers either stopped production or just filled orders from existing inventory.
So, now that demand for parts is rising again, the entire supply chain needs to be restarted.
There are several reasons why PC parts are becoming so expensive.
For example, supply chain issues have slowed production when demand is increasing due to more people working from home.
There is a worldwide shortage of components, especially chips used to make PC parts, adding to the already high production and shipping costs.
Finally, PC parts manufacturers must invest in research and development to stay innovative and competitive, which is a huge cost that increases the price of the final product.