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Sat, Mar 30, 2002 - Page 21 News List

NEC, Sony boost their PC prices but investors say the strategy won't last

BLOOMBERG , TOKYO

NEC Corp, Sony Corp and Trigem Computer Inc say they are raising prices for the first time in at least five years to keep pace with the higher cost of chips and other parts. The strategy may backfire because sales aren't rising, some investors say.

"PC demand has been driven by lower component prices, not necessarily by real consumer demand," said Nobuaki Murayama, who helps manage ?60 billion (US$452 million) at Cigna International Investment Advisors Co in Tokyo.

The latest global sales projections back him up. About 29.4 million PCs will probably be sold in the second quarter, less than the 30.5 million in the previous three months, according to Gartner Inc. Sales will rise just 4.3 percent this year.

NEC and other Asian rivals, whose profit margins on PCs are already razor-thin, say they have no alternative, even though they risk driving away customers and snuffing a nascent industry recovery. Dell Computer Corp expects industry sales to rise as much as a tenth this year.

The price of some DRAM chips, the main memory used in PCs, tripled since November to levels last seen about 11 months ago. LCD prices, which fell as much as 70 percent in the 18 months through September last year, are also on the rebound.

The result: Sony's latest Vaio PC series, which will debut in April and May, will probably be 13 percent higher than current models, spokesman Shigenori Yoshida said in an interview. It's the first time Sony has raised the price of a new version of an existing Vaio model since the company introduced the series of computers in 1996.

Apple Computer Inc raised the price of its flagship iMac PCs by as much as 7.7 percent last week. NEC is raising prices, and South Korea's Trigem, the largest PC maker by volume, boosted the price of existing models in Korea by an average of 3 percent.

To be sure, component-makers say they are struggling to keep up with demand. Samsung Electronics Co, South Korea's most profitable company, can supply only up to 70 percent of the orders it gets from clients for large-sized thin-film-transistor LCDs, Cho Yeong Dok, the head of Samsung's TFT LCD division, said this month.

Some PC makers, including Fujitsu Ltd of Japan and the local Acer Inc (宏電), say they are resisting the urge to raise prices, saying gains in component prices have been magnified by their collapse last year.

"The recovery is a gradual one and the second quarter is traditionally the slowest season for PC demand," said Henry Wang, a company spokesman.

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