Moore’s law violated by inflation – your new laptop will cost more

Posted: 05.22.08
Another contributor to sluggish PC sales for this year Even though one of the applied tenants of Moore’s law is that prices will drop over time (Moore never said that, it’s just a statement that has been applied to his original observation about feature size shrinkage over time), it appears the rising price of oil will change that as nations around the world grapple with inflation. Prices will rise. This appears to be showing up first in laptop costs as reports of higher priced magnesium-aluminum alloy chassis are coming out of China with cost increases of 10% due to rising metal costs caused by the increasing cost of extracting, processing, and delivering those metals thanks to the higher price of oil. And although some notebook vendors are looking at using plastics, that won’t help given that plastic is made from oil. Other costs are increasing as well and Acer, HP, and Levovo had indicated their ODMs are raising prices by as $5 to $20. Compal and Wistron the world's three largest contract manufacturers have reported they will be raising prices for the first time. At the same time Hynix Semiconductor, the world's No. 2 memory chip maker raised contract prices for computer memory chips by about 15 percent last month and expected further increases in May although some expect DRAM prices to start falling again in the fourth quarter; this may be wishful thinking. Desktop PCs won’t escape these cost increases and if personal and corporate incomes don’t increase accordingly then the inflationary increases in PCs could have a dampening effect on already sluggish sales.