For years, the PC business has been plagued by the issue of why computer components are so costly in India. Several causes have been given, including a lack of labour and GPUs, increasing taxes on Chinese imports, and a lack of computer components. However, it is more complicated than that. This article discusses some factors contributing to the high cost of computer components in India. Whether or if they are reasonable reasons is another story.
Labour shortages
India’s labour scarcity is a sign of the post-lockdown economy, which is not unique to the nation. This global labour shortage is hurting global production chains, generating interruptions that impede economic development and result in consumer product shortages. It is unclear how this labour shortfall will affect the US economy or the eurozone, but experts are assessing the situation and considering alternatives.
There’s a labour shortage when there aren’t enough competent employees to fulfil demande. Many variables might contribute to this scarcity, including location, specific needs, and seasonality. There was a severe scarcity of semiconductor chips in 1988. Due to a scarcity of CDMA chips, mobile phone makers made a concerted effort to adopt the standard in India and the United States. An earthquake in India in 2011 disrupted the supply of NAND memory and screens. As a consequence, the cost of these components has risen dramatically.
Tariffs on Chinese imports have been raised.
Tariff increases on Chinese imports are harming Indian consumers in a variety of ways. It has harmed rural regions more than metropolitan areas, raising costs in the Indian metropolis. The Consumer Price Index (CPI) is a price index that gauges the cost of consumer products such as food and clothes. Computer components are no exception, with prices rising with the CPI. Nonetheless, the tariff hike is not a total catastrophe for consumers.
Many businesses waited before changing their supply networks until they concluded the trade conflict. More firms are now looking for new suppliers, with Apple allegedly contemplating relocating operations to India or Vietnam. However, finding new suppliers will not be inexpensive. As a consequence, both local and international manufacturers have raised their prices. These additional expenses are subsequently passed on to the customer. As a result, computer components in India have gotten more costly.
GPUs are in short supply.
The rising price of GPUs is primarily due to a worldwide chip scarcity. The market for chips is in limited supply, and this shortfall is expected to last another year. It has had an impact on a variety of items, including game consoles and computer components, impacting computer part pricing. The shipment of GPUs to India has decreased in favour of other markets. However, GPU prices remain higher than MSRP due to increased demand.
The rising cost of GPUs is primarily due to bitcoin mining demand. Many gamers mine cryptocurrencies using GPUs to supplement their income. The lack of the Ajinomoto Build-up Film substrate, utilized in advanced semiconductor production, has reduced the availability of GPUs in India. This scarcity has impacted the worldwide supply of graphics cards, driving increasing costs in India.
PC sales are up.
According to IDC’s most recent market research study, PC demand in India remains robust. According to IDC, PC makers will supply more than one million PCs in India by 2021. However, the market will continue to be pricey. The conventional PC market in the nation comprises desktops, laptops, and workstations. The laptop category is now the most significant volume driver, with over eleven million devices sold yearly. The desktop category will fall from 2020 to 2021 but rebound with a 30% YoY gain in 2021. Overall, the government and consumers in India are supporting PC demand.
PC demand in India is robust across all sectors, and the market is strong across all regions. People continue to purchase PCs for usage at home and in the business, as well as for remote learning and working. The government sector recovered well, while the firm and SME sectors expanded yearly. In the first quarter of 2018, offline PC sales climbed by 41.4 per cent.
Price rises as a result of bitcoin mining
The expanding cryptocurrency mining business has contributed to recent price increases for computer components in India. On the illegal market, high-end graphics cards used for bitcoin mining sold for more than Rs2 lakh. However, they are currently available online for Rs1.1 lakh. The cryptocurrency community is selling off its high-end computer gear and driving costs. However, the scarcity of silicon in the computer components industry is also a problem.
Because bitcoin mining requires a lot of energy, it illustrates supply and demand well. The Cambridge Bitcoin Power Consumption Index estimates that global activity consumes 60 terawatt-hours of electricity per year. This is about as much energy as India’s population uses in a single day. The lack of energy compelled government officials to take extraordinary steps to secure power delivery. In 2017, India was able to fix its power constraint issue, which raised the demand for cryptocurrency-mining components.