Factors Affecting Product Cost
Staff -- Purchasing, 6/17/2004 2:00:00 AM
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Intel has cut the prices of its Centrino mobile technology platform—a mobile processor, chipset, and wireless card—between 11% and 26%. The company reduced the price of the 1.7-gigahertz chips with the 855GM and PM chipsets from $496 to $366. It cut the price of the 1.5-GHz processors from $311 to $278. Centrino chipset packages links laptop computers to short-range wireless networks.
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Expect standard logic prices to rise about 3%-4% by the end of the year. Reason: Purchasing has more than doubled from this time last year. Demand is expected to get even stronger in the third and fourth quarters. In addition, suppliers are under pressure to improve profitability after three years of declining prices.
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Look for continued downward price pressure on static random access memory (SRAM) chips, as manufacturers compete for business. Supply is steady and demand for discrete SRAMs is waning since more functionality is being embedded on microprocessors and other logic chips. IC Insights forecasts the average price of an SRAM falling from $2.45 in 2003 to $2.16 in 2006.
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Watch for slippage of 2%-3% on pricetags for multilayer ceramic capacitors by year's end. Despite strong demand, there is plenty of capacity. In addition, the cellular telephone industry is a big consumer of ceramic capacitors. Since most cellphone production occurs in such low-cost Asian countries as China, makers are under intense pressure to reduce handset costs. That price-cutting emphasis gets driven down to component suppliers, such as connector makers.
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Expect connector companies to try to raise prices soon. Last year, connector prices fell an average 7%. But connector manufacturers are seeing increased material costs, especially for precious metals used in plating.
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The price of gold could rise as high as $800/oz or even $1000/oz, "given current international developments," suggests strategist Craig Zaayman at ABSA Corporate & Merchant Bank in Johannesburg. This view is more bullish than that of other analysts who expect that gold will trade within the $370/oz to $430/oz range in the medium term.
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Electronics buyers' 30-day price expectations
| Up | Down | Same | Index* | |
| * Above 50=rising, below 50=falling. SOURCE: PURCHASINGDATA.COM |
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| Commodities voted most likely to rise in price | ||||
| Tantalum chip capacitors | 47% | 0% | 53% | 73.3 |
| SRAM: 256 K | 46% | 7% | 47% | 70.0 |
| NiMH batteries | 33% | 0% | 67% | 66.7 |
| Film capacitors | 35% | 6% | 59% | 64.7 |
| D-SUB connectors | 33% | 11% | 56% | 61.1 |
| Flash: 16 Mb | 29% | 7% | 64% | 60.7 |
| Wirewound resistors | 26% | 5% | 69% | 60.5 |
| Carbon film resistors | 25% | 4% | 71% | 60.4 |
| PLCC connectors | 27% | 7% | 66% | 60.0 |
| Flash: 8 Mb | 19% | 0% | 81% | 59.4 |
| MOSFET | 19% | 0% | 81% | 59.4 |
| DRAM: 16 Mb | 27% | 9% | 64% | 59.1 |
| Ceramic chip capacitors | 27% | 9% | 64% | 59.1 |
| Small-signal transistors | 18% | 0% | 82% | 58.8 |
| General purpose relays | 18% | 0% | 82% | 58.8 |
| DRAM: 64 Mb | 25% | 8% | 67% | 58.3 |
| SRAM: 1 Mb | 25% | 8% | 67% | 58.3 |
| NiCd batteries | 17% | 0% | 83% | 58.3 |
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