South Africans should expect to pay more for a wide range of computer products – including solid state drives, flash memory, and laptops – in the near future.
The rand’s exchange rate is the biggest influencer of tech product prices in South Africa, which are imported and typically paid for in US dollars.
The rand weakened from R12.32 to over R13.00 against the US dollar this past week, following President Jacob Zuma’s order to recall Finance Minister Pravin Gordhan from an international investor roadshow.
The move sparked speculation of a cabinet reshuffle, which was confirmed when Gordhan was replaced with Malusi Gigaba.
This sent the rand plummeting further against major currencies.
Memory shortage drives up prices
The weaker rand will push up the price of technology products in South Africa, but it is not the only reason why we will see higher prices.
Esquire CEO Mahomed Cassim said the price of solid state drives (SSDs), flash memory, and DRAM has seen an increase of 30% over the last three months due to shortages.
These shortages were caused by increased demand from the mobile market, with Samsung, Apple, and Huawei launching new flagship smartphones with more memory and bigger storage capacities.
Smaller brands are following suit, launching smartphones with similar specifications to popular high-end devices.
The increased demand for memory products has put pressure on DRAM and flash memory manufacturers, which are struggling to keep up with orders.
The shortage has caused memory prices to increase, which impacts the price of computer products.
LCD panel shortages
Another area where consumers can expect pricing pressure is televisions and laptops which use LCD panels.
Cassim said display panel pricing has increased substantially, which was also caused by a shortage in the market.
The cause of the shortage is a major manufacturer in Taiwan, which is part of the Foxconn business, recently deciding to stop selling LCD panels to other TV manufacturers.
The decision followed the company’s acquisition of Sharp’s TV business from Sharp Japan, after which it said it will use the panels to grow the Sharp Aquos brand.
The change on the supply side has put enormous pressure on other panel manufacturers since December 2016 to satisfy demand.
The shortage, which Cassim said is estimated to be around 10 million panels, has pushed up prices.
The good news for South Africa is that the strength of rand – prior to Gordhan’s recall – has made it possible for local TV, monitor, and laptop distributors to absorb the higher costs without increasing prices.
With the rand’s recent weakening, however, this may change in the near future.
Cassim said Esquire has prepared for the shortage by ordering three-times more than usual, and can now offer great prices on TVs ranging from 32-inch to 65-inch in size.