Rising prices squeeze Taiwanese manufacturers

From the end of 2020 to Q2 this year, the price of electronic components increased across the board, squeezing electronic end-product-related companies as costs for packaging materials, plastics, and shipping costs rose. For instance, in the mobile phone industry, raw material and transportation quotations have also soared. While the manufacturer’s parts list (BOM) is under pressure, end product prices are not reflecting cost pressures.

Although hiked-up end product prices for products, such as laptops, have been passed on to product costs, suppliers have their hands tied in terms of adjusting the end product price for smartphones, especially in the mobile phone market where traditionally, a small number of brand continue to make the most profits. Under the current situation, smartphone manufacturers are thus less willing to source materials, impacting businesses in Taiwan’s supply chains such as MediaTek, Largan, and Hon Hai.

Formosa Plastics has issued warnings that high costs have led to decreasing orders. Today, the smartphone industry chain is also facing rising costs and impacting the willingness of brand manufacturers to pull goods.