Price Increase

[Mohammad A]

Recentrly I've heard about a letter sent to some customers which informs about increasing prices across all product lines effective from 1st of Jan 2021.

It describes that current pandemic has created challenges in semiconductor industry which has lead to shortage of materials used to produce products.

I just wanted to ask ST employs to make it clear for us whether this news is true or is just a rumor, because we have seen some price increases in local stores for the same reason.

[Tesla DeLorean]

Not an ST employee, but can give you the current perspective.

Over the last decade the IC's have moved to a build-to-order model. There isn't a lot of slack capacity, and there are plenty of high-margin / quick sell-thru parts which they can make.

There are significant supply constraints, deliver times are pushing out beyond 26 weeks, so if you don't have orders on the books, don't expect to see parts in the near term.

As availability drops people with stock and orders in the queue will arbitrage those at premium pricing. If your distributor is one that doesn't bother to carry stock or plan, they are going to have to source at market prices.

The fire at AKM will also have significant impact, their die were in a lot of critical parts. The drop in consumer air travel has reduced slack capacity in mail/package delivery systems, and pure freight players are operating at higher capacities, pricing will increase to reflect the scarcity.

If you're not working directly with the factory, find a different supplier/distributor that is hungrier for business, and negotiate.

[Mohammad A]

Thanks for your explanations. What you said is an unwritten rule of the market, but the letter I'm talking about was a formal letter sent by STMicroelectronics International N.V. - Swiss Branch with STMicroelectronics logo.

Of course suppliers always may change their prices based on different conditions, but if ST decides to change prices, that's something else.

[Tesla DeLorean]

Not sure ST is going to wade into this here, surely the easiest route would be to get a price/delivery quote from your local ST sales office via your purchasing dept.

[Mohammad A]

The reason I'm asking this question is because our trusted distributors have increased their prices and trusting others to receive genuine parts is not easy and no one likes to get Chines clones (which may cause troubles for us and doesn't have benefits for ST).

We only need to make sure that whether this price increase is official or not and if it's official, how much does it takes time to get back to normal (if there's any plan to decrease prices in the future)