Priserne på 'commodity' chips når bunden

Selvom priserne på 'commodity' chips nu kun falder i et moderat tempo, så er det kun en begrænset trøst for producenterne. Priserne ligger nemlig nu historisk lavt, vurderer iSuppli (in english).

During the period from February 2009 to January 2010, global pricing for commodity components is expected to decline at a relatively moderate pace of 1.1 percent per month, according to a forecast from iSuppli’s Component Price Tracker (CPT) Index. This rate of decline is well within normal decreases as defined by Moore’s Law and learning-curve factors.

In contrast, during the last major electronics downturn following the dot-com bust from June 2002 to May 2003, the average monthly price fell by 2.5 percent.

iSuppli’s CPT index tracks pricing trends for multiple commodity component categories, specifically analog-monolithic, capacitors, connectors, crystals, filters, logic, magnetics, memory, oscillators, printed circuit boards, rectifiers, resistors, diodes, transistors and LEDs.

- Amid weak worldwide demand, there’s little opportunity for component suppliers to expand their market share or to gain incremental business, saysd Eric Pratt, vice president, pricing and competitive analysis for iSuppli.
- Because of this, there’s really no incentive for suppliers to reduce pricing. This is especially true when many commodities have been experiencing constant price declines for such an extended period. Prices in many cases are already at rock bottom.

Through February, the CPT index showed 17 consecutive months of decline starting in October 2007—a long period without at least one quarterly increase in pricing.

Mapping the erosion

The current phase of moderate price declines was preceded by a period of precipitous drops during the first and second quarters of 2007. From February 2007 to June 2007, the CPT index showed an average decline of 1.4 percent. By August 2007, pricing bounced back, rising by 0.32 percent and then by a robust 0.75 percent in September.

- The third-quarter 2007 rally in component pricing was due to a jump in NAND flash demand at the time, Pratt says.
- However, pricing began to decline after that as rising energy costs started to cut into economic growth and electronics demand. After that, negative economic news began to rule the day. Although raw material prices and energy cost were up, prices for components continued to decline.

Recovery to bring no relief

The CPT Index’s outlook indicates that even when demand for electronic components recovers, it is unlikely to bring renewed strength to pricing—and ironically may lead to further declines.

- When the volume comes back, we may see component suppliers actively taking down prices again. After the downturn, every piece of demand will become a jump ball. The second there’s anything to be gained by cutting prices, suppliers will take action, says Eric Pratt.

CPT is the only monthly multi-regional update of major component prices, both spot and contract market, providing pricing analysis on more than 350 part descriptions. For more on iSuppli’s Component Price Tracker service visit:
http://www.isuppli.com/Products/L2_ComponentPriceTracking.aspx?PID=1001