The price of computer parts is on the rise, according to industry analysts, putting the squeeze on PC makers who are trying to bounce back from a recession.
Speaking to the Financial Times, Gartner analyst Ben Lee said component costs will increase by 2.8 percent this year. On average, the price of parts has fallen by 7.8 percent annually since 2000.
High demand is to blame for pricier components, particularly with DRAM, which makes up 10 percent of a computer's cost. DrameXChange said prices for DDR3 RAM have spiked by 23 percent since mid-December. The cost of flatscreen monitors is up 20 percent, Gartner analyst Ben Lee told FT. Hard drives and optical disc drives are also in short supply. Capacity building for components resumed late last year, but generally takes a year before those factories come online.
In a way, that's good news for manufacturers, as it suggests people are buying more than expected, but it also puts them in a tough position of having to sacrifice profits, cut corners on features or raise prices on computers.
We've seen it both ways in the past. In 2005, a spike in memory chips and screens didn't deter the downward spiral of PC prices. In 2002, PC makers including Sony and Apple jacked up the prices on popular machines, but that was an extreme case where the price of memory doubled.
One thing that seems like a sure bet is stagnating netbook prices, because profits are already so slim on those $350 machines. Meanwhile, PC makers will keep pushing their high end computers, though you could get less bang for your buck when it comes to specs.