Manufacturers struggle to keep up with renewed demand as industry begins economic recovery

Component costs squeeze retail prices

A SHORTAGE in components is pushing prices up within the channel, as manufacturers struggle to make enough of the latest products to meet demand.

Statistics from Gartner research consultancy show that although prices steadily declined in the years preceding the recession, the last year has been characterised by a rise in component costs.

“Over the past six months, key components like high-end Radeon HD graphics cards have attracted a premium of as much as 30 per cent,” C Kohli, MD of YOYOTech, which manufactures and sells PCs, told PCR.

“It’s not only new products that have been affected, even DDR2 memory saw increases of up to 100 per cent in 2009. As the West comes out of recession, the East has been slow to respond. That delay has led to shortages and, at times, significant price increases,” continued Kohli.

“Distribution could have done more by being more confident in the UK market – holding more stock and extending more credit – but many disties seemed to be totally confused by the situation and buried their heads in the sand.”

Asus’ technical PR and component product marketing specialist, Iain Bristow, blamed the rises on a number of factors in the wider market: “The rising cost in components can be attributed to numerous things, including rising transport costs and the fluctuation of currency exchange rates."

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