The Price of Computer Components Is Going Up? (Part 2)

7/6/2012 5:39:30 PM


For the bulk of 2011, Ram prices were in a slump caused by high supply and low demand. Prices declined all the way through last year, eventually bottoming out around November, where they’ve stayed since. As any economist will tell you, this isn’t a situation that will last forever.

Description: RAM

 ‘According to every reliable expert, the price of RAM is due to steadily rise for the foreseeable future.’

The problem last years was that consumers were holding off on buying new machines for two reasons: belt-tightening economic measures and the temptation to spend their money on a tablet instead of a new PC. This was bad for RAM manufacturers, and no major RAM business (other than Samsung’s) profited in 2011. However, it was good for consumers, because those who wanted extra memory could snap it up at rock-bottom prices.

Unfortunately, that was then, and this is now. The recovering business in Thailand means global demand for computers is beginning to rise, and RAM prices are starting to be buoyed along with it. Elsewhere, the general instability of the technology industry has led to RAM manufactures Elpida filing for bankruptcy earlier this year, and fewer RAM companies will ultimately mean less competition and higher prices for us all.

According to every reliable expert, the price of RAM is due to steadily rise for the foreseeable future. At the low end of the market, memory prices have already gone up between 30% and 50% from their Q4 2011 low, but they’re still only half what they were this time last year.

The advice here is simple: buy your RAM quickly and aggressively. The longer you wait, the more it’s going to cost. Prices are just beginning to rise, and there’s no telling when they’ll stop. You may have already missed the best deals – don’t lose out any more!


Description: Processors

 ‘People are still willing to pay big money for Intel, and surely at some point, the company will notice.’

For decades, the price and power of CPUs has been closely governed by Moore’s Law, which states that the number of transistors on a chip doubles every two years. However, CPU manufacture has also begun to reach its physical and practical limits. Current retail trends have already switched CPU design to a multi-core template, because traditional single-core processors could get no faster without major changes.

For consumers, the world of processors is currently a simple one. Intel’s current ranger of Core CPUs offers substantially better speeds than its competitors at impressively low prices. The success of the Sandy Bridge and Ivy Bridge platforms, set against multiple AMD misfires, has made Intel the only game in town for serious processor power and good value performance.

But is that necessarily a good thing in the long term? With AMD unable to put up serious resistance, there’s no incentive for Intel to stay competitive on price. Right now everything’s rosy, but don’t expect processor costs to fall at either end of the spectrum in the long-term. AMD is slashing its prices but, knowing that its products don’t perform, people are still willing to pay big money for Intel, and surely at some point, the company will notice that and ‘correct’ its prices accordingly.

In terms of the overall processor economy, there’s a definite expectation that prices are going to actively rise soon, if they haven’t started to already. Chip inventories reached an 11-year high in Q4 2012, meaning had manufactures had a huge supply but not much demand, That turned around for Q1 2012, though, and the average days of inventory for semiconductors dropped by half a percent (from 84.1 days to 83.7 days), suggesting that demand is starting to pick up. The second half of 2012 will probably see the oversupply rapidly dropping as the market reaches new equilibrium. High demand is good for manufacturers, but bad for consumers looking for a bargains.


Description: Motherboards

Motherboard prices already rose significantly in 2011, and there’s considerable evidence that the trend will continue throughout this year. As one of the few essential components of a PC, it’s tough to circumvent price rises, and the introduction of new technologies and platforms makes buying a new motherboard something we find ourselves doing more and more often, so there’s a good chance it’s going to impact on you.

So far this year, motherboard prices are believed to have risen by 10% in Q1 2012 due to the combination of a rising cost of copper, and the Chinese labour market becoming more expensive.

Obviously, this is good for Chinese workers – the minimum wage in Beijing went up almost 10% on 1st January 2012, and another 15% on 1st April. Shenzen put its wages up almost 14% in February, but combined with a shortage of employees, workers are costing companies more, and those increases will quickly reach the consumer. The price of copper, meanwhile, went up by almost 15% per ton at the start of this year, meaning that mother boards cost more before they’ve even been made into motherboards.

These rises are similar in nature to the price increases motherboards experienced in Q1 2011, which themselves persisted for the rest of the year. Thankfully, it’s unlikely we’ll have to contend with another earthquake in Japan; last year’s is estimated to have forced motherboard prices up by a further 8%.

These price rises are actually running counter to the normal market trends, which are telling analysts that manufacturers are going to sell a lot more motherboards in the first half of 2012, than they did in the latter half of 2011. Asus expects sales to increase by 10%, while Gigabyte was aiming for a more impressive 20% increase in Q1 2012. The results aren’t yet in, but it’s clear that no one is being conservative. It’s not a question of whether there’ a sales increase, but of how big it is.

You might expect that to mean that motherboards are due a downward correction, but that doesn’t seem to be the cast. The materials and labour shortage is expected to last the rest of the year, so this isn’t the kind of problem you can realistically wait out in the short term. For that reason, our advice is simply that you choose your motherboard retailer carefully. Again, take chances on special offers and pay attention to release dates so you can snap up models that are due to be replaced as soon as the prices are cut!

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