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Phone frenzy is jacking up CD-RW prices

Chip shortages and poor forecasting do their bit

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The half of the population who own mobile phones may have inadvertently pushed up the price of CD-RW drives.

It seems that a shortage of the drives - particularly the slimline versions designed for laptops - can be attributed to a deficit of RF amplifiers (chips which boost radio signals). This is also used in handheld computers and mobile phones, and these shortages have interrupted the manufacturing chain. Furthermore, shortfalls in all things silicon are predicted for Q4.

The problem starts at the source, with a scarcity of silicon. It seems that last year manufacturers placed extremely large orders with the fabs, which were not met by customer demand. This year the orders have been more conservative, and the PC manufacturers are unable to increase volume quickly enough, and since the factories are honouring contracts with the mobile companies they don't have any surplus.

According to Doug Wood, UK and Ireland distribution manager at Panasonic, everyone is feeling the pinch. "We are under very tight constraint," he says. "The reasons are a ramp-up in demand and a lack of forecast. Lots of companies decided to get into it without really checking."

The popularity of MP3 and the decline of traditional floppy disks are also being blamed. This has driven demand for the drives up to the point where they have become an almost a standard, rather than luxury, feature on new machines.

A spokeswoman for Philips said that the market was growing so rapidly that it would be surprising if there were not shortages from time to time.

The problem is most acute in the laptop sector, but any shortages in the desktop arena hit much harder. After all, there are more people building desktops from components at home than there are building laptops, and of the 12.5 million drives sold last year, only around 750,000 went into notebooks, according to figures from Dataquest.

The famine has also driven prices up. In the US at the end of last year a CD-RW drive sold for an average of $215. Over the last four months this has risen to $250. ®

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