Taiwan quake rattles Indian computer industry

Assembled computers which are in the region of Rs 30,000 to Rs 40,000 depending on whether they are Celeron, Pentium II or III, are facing price increases ranging between Rs 3,000 to Rs 5,000 per computer. Larger companies have so far not passed on theincreases in component cost to the customer by hiking prices, but instead have not slashed prices as was the normal case in the last few months.

8220;Intel had dropped prices of the Pentium I and II processors over the last one month after the launch of their new processor Pentium III. But this has not led to any fall in prices of computers in the marketplace,8221; says Sanjay Gupta of Link World Infosys which operates out of Nehru Place in the capital and stocks almost all brands of computers. 8220;The gap between Indian branded computers and the assembled computers has narrowed and the unorganised sector has taken a big hit,8221; Gupta adds.

The falling prices of Personal Computers PCs which had delighted customers over the last year or so, may see a reversal as component supplies from Taiwan have been thrown offtrack and there are large backlogs that companies are facing in meeting with the demand. The backlogs range from a couple of weeks for some of the bigger companies to almost 4 to 6 weeks for others.

Themajor impact has been felt by smaller Indian manufacturers and those dealing with unbranded assembled computers. Says Vinnie Mehta, MAIT chief, 8220;these companies/ dealers normally have shot-term contracts for supply of components, with practically no inventories. With Taiwan being the largest supplier, they were thrown completely off guard and hence their margins were virtually stripped off.8221; 8220;In a scenario where prices of computers fell practically every quarter, this will be the first quarter which will see no decline in the prices but rather some hardening of prices,8221; explains Mehta.

Neelam Dhawan, vice president of IBM India says,8220; supplies are limping back to normal and we are now only a week or two behind in the supply schedules. We had a major problem last month but since supplies have resumed from Taiwan, we hope we have been over the worst.8221;

Taiwan is the largest original equipment manufacturer OEM supplying components to India. Supplies of motherboards for computers, PCBs Printed circuitboards, memory chips, floppy drives, CD ROM drives, monitors, Keyboards and plastic parts are all sourced from Taiwan.

With supplies of these equipment from Taiwan being disrupted for most of October, alternate sourcing of this material from China and Korea has led to some cartelisation and soaring prices.

8220;In the first half of October, there was panic in the unorganised sector which led to hoarding of various computer parts especially memory chips. As a result, memory prices jumped by 200 to 300 per cent during this period,8221; says Anil Gupta, director marketing of Microtek, an Indian manufacturer catering to the lower and medium end of the PC segment. 8220;Even now though these prices have stabilised somewhat, they are still 100 per cent more than what they were in August,8221; Gupta adds. 8220;Mother board prices normally ranging between Rs 2,600 to 4,000 are up by Rs 300 to Rs 400 and 14-inch prices are up by Rs 250 to Rs 400 depending on the brands,8221;Gupta adds.

Computer companies working on bulkorders were almost 4 to 6 weeks behind schedule in their supplies. New orders being booked by them may only be supplied in February-March next year.

Says Manpreet Singh, managing director of the largest IT catalogue shopping network in India and an offshoot of US-based Multiple Zones, 8220;our billings are nearly 40 per cent down from the pre-earthquake levels mainly on account of disrupted supplies of computer components and hardening prices.8221; Manish Aggarwal of Vinitron Computers says 8220;domestic manufacturers have been hit more than the multinationals in the business as we mostly depend on short-term supply arrangements8221;.