Mobile phone growth flattening as chip prices pressure margins

Rising chip prices are forcing portables manufacturers to look at increasing retail prices, reducing specifications or absorbing some of the cost and accept lower margins. This is acting to increase the gap between the prices of premium and budget products. Premium brands such as Apple or Samsung are better positioned to pass through cost increases due to stronger brand power and higher average selling prices, whilst more budget brands are more exposed to demand reduction if they increase prices. “While some stabilisation may occur, chip costs are expected to remain elevated in the near term, favouring companies with strong pricing power, efficient supply chains, and differentiated ecosystems,” said Benchmark battery analyst Anya Sidhu.