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Manufacturer Interviews on Tariff Impact to PC Part Prices

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Jim K    11,250
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You may have heard about the new tariffs impacting PC component prices by now, with increases upwards of 10% to 25% by January 1st of 2019. We’ve spoken with several companies and individuals in the industry to better understand how PC builders can expect prices to increase. On our list of those providing insight is EVGA CEO Andrew Han, NZXT, SilverStone, and Alphacool, among off-record insight from others. In the very least, North American buyers can anticipate price increases as a result of the current administration’s new tariffs – it’s just a question of how much of that is passed on to the consumer.

 

Here’s the “TLDR” of the tariffs: Nearly every computer component is affected in North America, and those prices can reach outward to other regions as companies try to stabilize for a downtrend in overall revenue. The tariffs were pushed into law by the US Federal Government, with the first 10% taking effect on October 1st of 2018. After this, an additional 15% tariff will be mandated by the US government on January 1st of 2019.

 

Tariffs on PC Components

 

We’re looking at over a 25% increase in product import prices by next year, which will be passed on to consumers. The full list of tariffs includes power supplies, motherboards, video cards, complete system builds, bridges, SSDs, mouse pads, mice, keyboards and mice only if bundled together (but not on keyboards if sold separately), CPU coolers, cases, chairs, and more. The tariff cost is applied as goods come into port. Technically, it is the company that must pay the tariffs, but those costs will be passed along to consumers. This isn’t the manufacturers being greedy: As a reminder, some of the video cards we’ve worked with have profit margins of under 3%, with the average at around 4%. Very few cards can reach even an 8% margin. The retailers profit more than the video card makers, and all of this means that it is impossible for the manufacturers to bear the burden of a tariff increase without consumers also paying more.

 

The most heavily impacted companies are those which make electrical components that come from China, so that would include… all of them. Even case manufacturers are getting hit, because aluminum and steel are included in the list of affected items. Very few manufacturers in this industry make things outside of China, and it is typically Taiwan when made elsewhere. Taiwan isn’t tooled-up with enough factories to allow a mass switch-over of manufacturing, but it does have a few low-capacity motherboard factories, like Gigabyte’s, and a few case factories, like In Win’s and Lian Li’s. Even still, all of these companies make more goods in China than not, and will be affected.

 

//snip

 

 

 

Full article and manufacture comments at Gamers Nexus

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