Good news about tech prices in South Africa

South African consumers can look forward to cheaper prices on computing products and gadgets thanks to the stronger rand, retailers have told MyBroadband.

However, the ongoing global shortage of computer chips means that some equipment may not become cheaper and could even see price increases.

Over the past year, the South African Rand has slowly been regaining its value against currencies like the US dollar, Euro, and the British Pound after being hammered in the first quarter of 2020.

The axe of a sovereign credit downgrade to junk status from Moody’s caused the Rand to steadily weaken since December 2019.

After the Covid-19 pandemic hit all emerging market currencies, including the Rand, came under pressure. This saw the local currency weaken to over R19 per dollar.

Since then the Rand has steadily strengthened against the Dollar, despite a bleak economic outlook due to the coronavirus pandemic and another downgrade from Fitch Ratings and Moody’s in November.

This month the rand hit a major milestone, briefly dipping below R14.

A stronger rand is expected to translate into cheaper prices on imported goods such as mobile devices, computer hardware, and other gadgets.

“We will most definitely see lower pricing due to the strengthening of the Rand,” Titan-Ice founder Johan de Klerk told MyBroadband.

However, it is difficult to say when exactly the more favourable foreign exchange rate will result in cheaper prices.

“A lot of factors need to be taken into account, such as current stock levels which might keep distributors from benefitting from the stronger Rand,” De Klerk said.

“On some ADATA [products] I am already updating our pricing. Let’s hope the situation improves even more in the near future.”

Raru director Neil Smith tempered expectations of cheaper prices, saying that the global shortage in semiconductors is causing component price increases.

“The stronger Rand should hopefully mitigate against that. The shortages are foreseen to continue throughout 2021 so prices in certain categories will most likely not experience much benefit during this period,” Smith said.

“Certain items will see decreases, and normally as tech is fully imported the Rand pricing should decrease fairly quickly.”

Intel CEO Pat Gelsinger recently warned that the chip shortage could last for years.

Wootware founder and CEO Rory McGee echoed the statements of De Klerk and Smith, saying that stock levels and component shortages will affect how quickly a stronger Rand translates into cheaper prices.

“Prices will likely be most positively impacted when there’s a supply/demand equilibrium that’s reached for products that contain advanced semiconductors,” McGee told MyBroadband.

“Taiwan Semiconductor Manufacturing Company has stated that they anticipate demand/supply imbalance throughout 2021. We’re hopeful that the supply of products might increase gradually throughout the year as things stabilize.”

McGee said that it is incredibly difficult to predict what is going to happen with tech prices in South Africa as there are many factors other than foreign exchange rates at play currently.

“Even now we’ve just found that a new cryptocurrency, Chiacoin, is causing spikes in the solid-stated drive market.”

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Good news about tech prices in South Africa