Smartphone prices are unlikely to drop

WHILE MOST phone makers are increasing their production of smartphones, don't expect prices to drop any time soon.

According to Digitimes, handset vendors are having a devil of a time finding supplies of components.

Supply of HDI circuit boards is expected to get extremely tight this year as vendors are aggressively expanding their smartphone product lines.

Unitech Printed Circuit Board general manager Hsu Cheng-Hung said that most of the handset samples made by PCB makers are for smartphones or mid-range to high-end phones.

Hsu said that vendors are expanding their smartphone lines to grab market share. This means HDI board demand will increase and supply may become tight in 2010.

His comments also follow similar complaints about memory components and drives that form key parts of newer smartphones. As we have reported, most NAND flash production in Asia has been bought up by Apple for its Iphone and Ipod gadgets. This is making it difficult for other suppliers to source components.

All these component shortages will mean that next year those smartphones which do make it to market will have hardware that costs the vendors more dearly. We reckon it is fairly unlikely that these higher costs won't be passed on to consumers. µ