Steep wage hikes in China will eventually be passed on to end consumers as major notebook original equipment manufacturers (OEMs) have expressed their intention to raise manufacturing prices and big notebook brands such as HP, Dell and Acer are assessing retail prices for their new models to reflect rising costs. The notebook supply chain has faced three waves of price spikes since the beginning of this year. In the first quarter, noted brand-name companies usually absorbed increased costs as a result of soaring prices for DRAM and other components as they were afraid that upward price adjustments could affect market demand. Responding to a recent, dramatic depreciation of the euro, major notebook brands have raised retail prices. Foreign market analysts said notebook prices may rise further in the fourth quarter of this year due to the recent wave of wage surges in China. The following are excerpts from local media coverage of the issue: Economic Daily News: Major notebook OEM companies, such as Wistron and Inventec, have said recently that it may be inevitable that OEM prices rise amid soaring wages in China. Several OEM heavyweights, including Quanta and Compal, are scheduled to hold shareholders' meetings Friday, during which production costs and price adjustment issues are expected to be a major focus of discussion. Industry sources said OEM cost accounts for about 30 percent of notebook retail prices, with wages making up about 10 percent of the overall cost. The effect of wage hikes on the price of end products will be about 3 percent, they added. As major notebook brand companies are likely to raise prices in the fourth quarter of this year when they market new models, OEM makers are scheduled to negotiate cost adjustments with their brand-name customers in September, according to the sources. (June 17, 2010). Commercial Times: Among notebook OEM makers, wage hikes in China will have a major impact on Hon Hai Group -- the world's largest electronics contract maker -- whereas the effect on other Taiwanese peers, such as Quanta, Compal and Wistron, will be relatively limited, said Daniel Chang, Macquarie Taiwan's research division head. According to his estimates, the impact of a 200 yuan increase in wages in China on the four notebook OEM heavyweights' pre-tax profits would be 9.7 percent for Hon Hai, 1.8 percent for Quanta, 1.6 percent for Compal and 2.8 percent for Wistron. Chang further said that Hon Hai -- the parent of Foxconn Technology Group in China -- no longer enjoys the benefit of low costs after its 122 percent spike in basic wages for workers at its Chinese factories. As a result, Hon Hai is not expected to scramble to seize notebook OEM orders with cut-throat prices, which will be good news for its major competitors, Chang said. Meanwhile, International Data Corp. (IDC) analysts predicted Wednesday that NB prices will continue fall in Taiwan, with mainstream prices ranging between NT$20,000 and NT$25,000, down from the previous NT$25,000 to NT$30,000. Although standard notebook computers have reclaimed its leading place in the PC market with the netbook fever fading away, the average NB price still saw a 3.2 percent drop in the first quarter of this year, the analysts said. According to the latest IDC quarterly report, the global PC sales posted a 27.1 percent year-on-year growth in Q1. It also forecast that the 2010 annual PC sales growth rate will reach 19.8 percent, with a volume of 355 million units. The IDC further forecast a 3 percent increase in Taiwan's NB shipment in Q2. (June 17, 2010). 