A new European Commission ruling could put an end to the PC price wars.
A decision to reintroduce minimum prices on imports of computer memory chips from Japanese and South Korean manufacturers will see the price of DRAM chips rise sharply. The increase could push up the cost price of 16Mbit DRAMs from $8 (#5) to $10 a unit, a 20% increase.
The minimum price agreement will take effect from 1 April. Manufacturers such as Fujitsu, Dell and Apricot, which import chips from Japan and South Korea and assemble machines in Europe, have warned the agreement would make it difficult to maintain margins and could spell the end of big end-user price cuts. Only semiconductor firms such as Siemens which make chips in Europe will benefit from the agreement.
Paul Stow, general manager for volume server business at Fujitsu, slammed the EC decision as "anti-competitive and anti-consumer".
He said: "It's very difficult to say yet exactly what impact the decision will have on PC prices, but the rise in cost of any component is going to affect pricing. I've no doubt that it will mean a rise in the price of DRAM and this will filter through to Sims and into the PC marketplace.
"Competition in the market is very tight, so even if PC prices don't go up, the manufacturers will have to put a break on big price-cutting activities," Stow added.
The DRAM pricing will be determined on manufacturing costs plus a single digit margin. But, according to Stow: "This cost-plus-margin technique will be very difficult to maintain, as working out the manufacturing costs of DRAM is very hard to prove."
According to some reports, the EC received warnings earlier this month from US companies with manufacturing operations in Europe that the imposition of minimum DRAM prices would mean these operations were no longer economically viable.
South Korean and Japanese manufacturers currently have around 80% of the $6 billion European market for DRAM chips.
The European Commission decision is designed to protect European DRAM manufacturers but in doing so it could have a far more wide-ranging impact on European PC makers already suffering from a slow-down in sales. Commentators fear that the move could also create a significant black market for smuggled components.
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