The Impact of Metal Commodities on the Technology Sector

For many tech lovers, it can be easy to fixate on end-user products like the latest gadgets and digital devices. However, it’s also essential to consider the factors that go into producing these tech products. In 2022, shares of metal companies surged as investors banked on a surge of strong demand from China — the biggest commodity producer and consumer — after a Bloomberg report that the country was considering a $220 billion (₹16.6 trillion) stimulus.

Industry experts expected the stimulus plan to revive waning demand for metals in India, injecting a much-needed booster for local metal companies. But what does this have to do with the tech sector? Metal commodities can significantly impact the tech sector by affecting factors such as supply chain disruptions, cost of production, and sustainability.

Below, we’ll take a closer look at what metal commodities are and how they can impact tech companies and consumers:

What are metal commodities?

Commodities are raw materials used to produce finished goods. These include agricultural products, mineral ores, and fossil fuels. For people looking for additional ways to become rich, commodities offer investment opportunities so they can profit from the ever-changing prices. As covered in our post on becoming rich, investments have become a smart way to grow your money, as assets can appreciate over the years and give a sizable return on your investment.

Thanks to digital technology, people can easily trade commodities using reliable online trading platforms that have a host of built-in features. These features help keep traders’ finances and investments secure while providing access to global markets where traders can buy and sell popular commodities such as gold and silver and top-traded energies like crude oil and natural gas.

Today, some of the best precious metals to invest in include gold, silver, platinum, and palladium. Traders can buy and sell these metals in various forms, such as keeping bullions for physical trading, certificates from bank holdings, ETFs that allow you to invest in smaller or larger quantities, or stocks and shares of metal mining companies for better returns over time. Below, we’ll look at some of the critical impacts of metal commodities on the tech sector:

The global chip shortage

Nearly every tech device and gadget you see or own today is powered by semiconductors or microchips. This includes any device that needs some level of computing power, such as your smartphone, computer, or other everyday appliances.

In the past few years, disruptions in the chip supply chain have led to a global chip shortage leading to product demand running more than 50% higher than companies can supply. The semiconductor manufacturing process involves metals such as copper and aluminum, and disruptions in the metals supply chain or mining process hinder chip production.

At the same time, electronic devices such as smartphones and computers contain numerous metal components, and the ongoing shortage and fluctuations in metal prices can affect the overall cost of manufacturing these gadgets, impacting their final price tag for end-users. One of the most notable examples of how the chip shortage impacts tech consumers is the shortage of computer graphic cards in the past few years due to the combined effects of cryptocurrency mining and disrupted supply chains.

Inflation of tech product prices

Given these issues surrounding metal commodities and their supply chain, keeping up with these changes is critical if you’re planning to buy a gadget or simply invest in metal commodities. Shortages ultimately impact the prices and accessibility of tech products like the latest iPhone and other devices. Many tech companies have resorted to raising prices on existing products to work around fluctuating metal prices and disruptions in the metal supply chains. Meta recently increased the cost of their VR headset Quest 2 by $100 (₹8,300) to help make up for revenue losses across the business. Similarly, audio product company Sonos also raised prices for its line of wireless speakers due to supply chain costs.

If you’ve wondered why some tech products like smartphones are so expensive lately, this may be why. Fortunately, other brands like Samsung can keep costs down by providing high local value, as they have localized their component ecosystems to the country instead of following the import and assembly model. Components such as displays, printed circuit boards, batteries, and camera modules are produced in India, allowing for much cheaper prices.

While inflation among tech products seems less obvious or noticeable compared to rising fuel and gas prices, experts have noted that numerous devices across global brands have gotten explicitly more expensive. At the same time, prices of older devices also take much longer to drop. As such, it’s best to wait a bit and see how the market moves before buying anything new or making a significant investment.