Tech prices got cheaper in South Africa — but it won’t last
The prices of CPUs and graphics cards are the lowest they’ve been since the end of 2020, but South African retailers don’t expect this to last.
Due to the global chip shortage and the restrictions of the Covid-19 pandemic, the price of hardware has skyrocketed since 2020.
However, local prices have been declining in March and April this year.
The price reductions are thanks to several factors that have influenced the market.
“This is due to the supply lines catching up with backorders, and also a stall in the market from consumers who have been holding back on purchases while prices were high,” Dreamware Technology chief operations officer Justin Bekker told MyBroadband.
“We’re seeing very healthy stock levels, and pricing has been trending downwards since the start of the year.”
Wootware founder Rory Magee said that a stronger rand-dollar exchange rate since December 2021 has positively impacted the tech market.
“There has also been a greater availability of GPU stock and new CPU launches in 2022, which have helped bring more options to South African consumers that offer greater value,” Magee told MyBroadband.
Although this price decrease is welcome, it is unlikely to last.
Justin Bekker, the Dreamware Technology chief operations officer
The tech market remains volatile due to the chip shortage and the ongoing effects of Covid-19 — the pandemic has led to shipping times nearly tripling.
Additionally, although supply has improved over the last few months as manufacturers managed to catch up to backorders, it will only take one delay for prices to skyrocket once again.
This is due to the production approach chip manufacturers use.
“Manufacturers use a Just In Time (JIT) management philosophy in the production of components which means they aim to meet customer demand exactly in time in terms of quantity and quality,” Bekker explained.
This system is highly efficient and cost-effective but suffers from fragility. Any problem that arises can disrupt the entire system — such as the chip shortage or Covid.
“Because this was the widely adopted philosophy to production, it is making it extremely difficult for the industry to recover from these unforeseen events which effectively keep kicking it while it’s down, making it harder and harder to get back up again,” Bekker said.
However, there is hope on the horizon even if 2022 prices remain volatile.
Many manufacturers are expanding their facilities to tackle the chip shortage, which could lessen its severity from 2023 onwards.
“[Prices are] very likely to be volatile throughout the year, though hopefully the broad trend will be positive over the year and going into 2023 as the semiconductor shortage resolves,” said Magee.
Bekker said now is the time to act if you’re looking to upgrade your PC with a new CPU or graphics card and have been holding off.
“If you’ve been waiting to pull the trigger, now’s the time because prices are going to start increasing as stock becomes scarcer from here on out,” he said.
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