Commodities prices and manufacturing

The manufacturing cost in electronic industry is continuously rising with the increasing prices for materials, energy and transportation. Metal prices have shown a dramatic rise. Copper has risen more than 70% and has hit a high of $7,780 a ton on the London Metal Exchange in May, 2006. Higher energy prices have taken a toll on many manufacturers and rising prices are representing broader inflation. Companies that assemble ICs are facing with higher prices for materials including epoxy mold compounds, die attach materials, laminate substrates, lead-frames, and wires for wire bonding. Average selling prices for many semiconductors are also expected to rise because if these prices do not rise, companies will have to suffer lower margins. The purchasing of electronics are also expected to be affected with the rising prices of electronic goods, due to the higher prices for energy and basic commodities.