No matter where you are in the world, there remains one constant: computer parts are expensive. And by expensive, we don’t mean luxury pricing either. Computer hardware prices have gone up over the last few years, and the price increase is somewhat noticeable.
There are several reasons as to why computer parts are so expensive, and we’ll be talking about them in this article.
Why Are PC Parts So Expensive?
Computer parts aren’t unreasonably expensive. If anything, majority of next-generation PC components are only about a few bucks more expensive than their previous generations. And every time next-generation components break into the market, their previous generations become subsequently cheaper.
But one question remains: why are PC parts so expensive? We’ll take a look at some key factors and why they affect pricing for computer parts.
The world stopped when the Covid-19 Pandemic blew up in March 2020. What was thought to be a 2-week lockdown for the majority of countries turned into a year and a half of uncertainty, fear, and death.
And with schools, offices, and businesses being closed, people turned to technology to connect to one another. Mobile devices, laptops, and personal computers were in high demand. Our increased reliance on these devices have forced manufacturers to create more. Unfortunately, it was difficult to keep up with the demand.
Lockdowns have forced factories to work with minimal manpower, with some facilities being shutdown completely due to lack of manpower. Production of PC components was severely limited.
Shortage of supply does not mix well with higher demand, so it made sense for manufacturers to increase the pricing of their computer parts.
Production facilities were either shut down completely or ran with highly reduced staff, severely limiting production. Limited production plus higher demand equals more expensive parts. Purchasing computer parts turned into a challenge for a lot of people.
The demand for laptops, mobile devices, and personal computers skyrocketed the longer the lockdown lasted. Students went to their classes online. Parents worked from home. People bought their stuff online.
What used to be a household that could survive with one computer turned into a household where everyone needed a computer. Multiply that with the millions of families affected worldwide, and you’ll see why manufacturers couldn’t keep up.
Computer parts became so expensive when people started to mine for cryptocurrency. The demand for mining was exacerbated with the Covid-19 global pandemic. Processors and graphics cards were in high demand. And with supply chain being affected by the pandemic, to say that these PC components jumped to high prices is an understatement.
Bitcoin, probably the most popular form of cryptocurrency, was valued at $6000 at the start of the Covid-19 pandemic and rose to $60,000 by the end of November 2021. But to mine Bitcoin, you needed massive computing power. A high-quality graphics card like the RTX 3000 series, or even something from the RTX 2000 line, could handle the processing strain that came from mining.
The global pandemic started a chain of events when it to the manufacturing of PC hardware. One of these significant events was the chip shortage. Semiconductors, or microchips, are found in all electrical devices, so you can see just how badly the chip shortage affects a lot of all the technology we are reliant on.
Factories that produced semiconductors closed down when the pandemic began, and this slowed down the production of chips. These chips would go into a PC component, like a GPU, RAM, or processor.
And with the chip shortage, computer parts prices went up as a way for manufacturers to not lose a lot of money. After all, they still needed to keep their margins. When chips are expensive, the price increases for computer parts that needed these chips.
Scalping and Hoarding
With PC parts in limited supply, miners and scalpers took this opportunity to hoard a lot of computer components, specifically graphics cards. This resulted in an overly-inflated market of high-end graphics cards, with MSRPs being ignored. Third-party retailers were almost always camped out by these people so regular Joe’s and Jane’s wouldn’t even stand a chance of getting parts for a reasonable price.
Graphics cards of certain models were insanely higher than MSRP, so combine this with supply chain issues, and you’d never see them hit close to MSRP back then.
Sadly, some people were willing to pay more money for this PC hardware because they were desperate to have them. A graphics card that was incredibly high demand would be sold at 400 times its MSRP without question.
Labor Shortage or Staff Shortage
The global lockdown didn’t just lock people into their houses. The lockdowns literally starved businesses of one important resource: manpower.
At the height of the pandemic, the entire system for manufacturing and producing computer parts and hardware was severely affected by a labor shortage. This resulted in severe price increases across the board. To prevent the factory from shutting down, workers were laid off to minimize labor costs. Loss of life also contributed to the labor shortage as people died from the Covid-19 pandemic during the first few months. People were afraid to show up to work for fear of being exposed to the virus and bringing it home, so it wasn’t surprising to know that some of them resigned from their work.
But as the world reopens its doors, employers are now incentivizing their employees to show up for work with wage increases and other benefits. Some companies are also trying to fill in the vacant slots left by employees who passed away from Covid-19.
Regardless of the reason and combined with the chip shortage, factories and manufacturers are dealing with price increases to help augment the salary increases promised to their employers.
Chip shortage affects the entire supply chain for the most part, but another major contributing factor to the price increases for PC hardware is increased freight.
Computer parts that are sold in one country aren’t exactly manufactured in that country. For instance, parts sold in the USA may or may not have been manufactured in the USA. If parts are made in another country, they’ll be freighted to the USA. And shipping costs have gone up over the last few months due to the increased fuel prices.
The increase in freight costs does not only cover the PC parts that were manufactured but also freighting and shipping of raw materials to factories and manufacturing plants. It was understandable as to why computer parts had high parts.
With Computer Parts So Expensive, Will Prices Ever Go Down?
Unfortunately, prices won’t be returning to normal until 2023. This is based on the prediction that semiconductor shortage will be alleviated as things slowly go back to normal.
The cryptocurrency market is also going through the BEAR phase, meaning prices of certain cryptos such as Bitcoin and those that were heavily mined have gone down. As this trend continues, GPUs will return to close to a reasonable price.
Raw materials for PC hardware and many components will probably increase in production as well since the pandemic hit. Manufacturers and factories have already recruited many workers to continue making computer components.
A lot of computer parts such as processors and graphics cards are still in short supply, at least for some previous generation models. Nvidia and AMD, two of the biggest GPU manufacturers, have already made their new graphics cards to be unusable for mining crypto.
The Wrap Up
There you have it, just some of the major reasons as to why computer parts are so expensive right now. With low supply, chip shortages, labor shortages, and price hikes, certain computer parts increased their prices to unprecedented levels just to help keep the companies afloat.
Granted, buying computer parts might be a lot easier now than it was a couple of years ago, but we’re still reeling in from the increased demand and higher prices that were caused by the pandemic.