First, we need to recognize the difference between the cost and the price of a product. Two terms which are commonly and easily conflated, but, in terms of business operations, are not the same thing. Part of the reason for that conflation is because, accounting wise, the price (the accounting revenue) of a product sold by some selling firm, represents an accounting cost to the firm to which it is sold. When we focus within a single firm, however, cost has to do with the manufacturing expense of a product, while the price has to do with what it will fetch in the marketplace, and so, the revenue it will bring to the selling firm. So, product cost is the sum of the cost of all resources consumed (which we can simplify here as, raw materials + labor) to produce the product. Marcel has already identified upthread many of the technology related aspects to IC production cost in particular.
Product price is wholly determined by market conditions, and is fundamentally determined by the extent to which the supply of the product is either insufficient, or instead exceeds market demand for it. The greater is the demand, the higher is the price it can fetch. The greater is the supply, the lower is the price. The reason competition lowers price is because it increases supply. This is, of course, basic economics. Such simple supply-demand relationships can to help understand why two products with very similar production costs, can fetch very different prices in the market.
An important truth from the above is that the cost to manufacture a product does NOT determine it's price, despite the common misperception among engineering and manufacturing departments that it does. Market conditions (supply vs. demand) determine the price. What cost determines is whether a product can be competitive on price, while still making a profit. This is largely why there is great pressure on engineering and manufacturing to reduce product cost. Engineering departments also receive pressure to innovate on those product performance/function areas which customers value. Doing so, assuming that the increased value is communicated and promoted by marketing and sales (which is their important and necessary function), increases market demand for the product. Which then increases the price it can fetch.
Product price is wholly determined by market conditions, and is fundamentally determined by the extent to which the supply of the product is either insufficient, or instead exceeds market demand for it. The greater is the demand, the higher is the price it can fetch. The greater is the supply, the lower is the price. The reason competition lowers price is because it increases supply. This is, of course, basic economics. Such simple supply-demand relationships can to help understand why two products with very similar production costs, can fetch very different prices in the market.
An important truth from the above is that the cost to manufacture a product does NOT determine it's price, despite the common misperception among engineering and manufacturing departments that it does. Market conditions (supply vs. demand) determine the price. What cost determines is whether a product can be competitive on price, while still making a profit. This is largely why there is great pressure on engineering and manufacturing to reduce product cost. Engineering departments also receive pressure to innovate on those product performance/function areas which customers value. Doing so, assuming that the increased value is communicated and promoted by marketing and sales (which is their important and necessary function), increases market demand for the product. Which then increases the price it can fetch.
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Like TI buying National semiconductor, Burr Brown, etc...and Analog Devices buying LT..., Cadence buying Orcad and their respective monopoly on a market where 20 chinese companies appeared "over night" offering the same diodes, ic's , transistors etc from behalf of the "Red emperror's Party" at 1/3rd...1/5th of the western price? Have you seen many TI or AD parts in consummer products lately?Weird enough, the main manufaturers of equipment full of chinese cheaper components are also big western companies...
Well some see koreean LG or japanese SONY or Panasonic as western companies for a few decades now...although in the 80's there was a specific antijapanese political and financial embargo that gave Sony and Panasonic the wings and capability to aquire all the other bankrupt japanese companies for peanuts, then we started to complain about Sony cutting costs, Panasonic moving to China its production...along with all Silicon Valley...
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Market sets (acceptable) price
ZERO Politics on that.
A seller may ask anything he wants for anything; he will get sales or not.
If enough sales, to cover cost and profit, he´ll thrive.
In a way, buyer sets the price (by voting with his wallet) but how much is he going to accept, depends on many factors:
* functionality: if the product is useless to you, you won´t buy it, what for?; in principle it needs to fulfill some need
* real quality.
* perceived quality , there's where publicity, Forum comments (which are a hidden form of publicity), brand, "history", hype, snake oil, you-name-it can have an important influence on sales, and hence on price
* availability: Chinese products are cheap but half a Globe away, LM3886 is very desirable on its own merits but unavailable, etc.
* sometimes a lower price is wrongly perceived as "low quality"
For a Manufacturer, setting a list/sales price is a very complex problem.
I am quite certain than NO Manufacturer (me included) cares sh*t about what flag is flying over the Factory, only about product functionality, price, availability.
ZERO Politics on that.
A seller may ask anything he wants for anything; he will get sales or not.
If enough sales, to cover cost and profit, he´ll thrive.
In a way, buyer sets the price (by voting with his wallet) but how much is he going to accept, depends on many factors:
* functionality: if the product is useless to you, you won´t buy it, what for?; in principle it needs to fulfill some need
* real quality.
* perceived quality , there's where publicity, Forum comments (which are a hidden form of publicity), brand, "history", hype, snake oil, you-name-it can have an important influence on sales, and hence on price
* availability: Chinese products are cheap but half a Globe away, LM3886 is very desirable on its own merits but unavailable, etc.
* sometimes a lower price is wrongly perceived as "low quality"
For a Manufacturer, setting a list/sales price is a very complex problem.
Now YOU are getting into Politics 😉
I am quite certain than NO Manufacturer (me included) cares sh*t about what flag is flying over the Factory, only about product functionality, price, availability.
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Lm3886 lost to class d amps availability...
It was never aimed at audiophile community, for a while it was found in more portable PA systems than home consumer or audiophile equipment, but still had less than 5% presence in all home and proffessional audio equipment so nobody really cares about lm3886...
Even with the pandemic,Evergreen ship blocking Suez canal,
anti whatever policies... and longer delivery time, the cost of delivery from China to my home (about 15 000miles on Seas) is cheaper than local delivery within 100 miles ....
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Yes, it's remarkable, but true. Most of the transport cost is the last 100km to the consumer.
Some years back a university did a study of the carbon footprint of importing lamb from New Zealand to the UK compared to the same reared in the UK. Astonishingly the NZ lamb had a lower footprint.
Containerised storage is something of a marvel.
For competitors in a free-market, the ultimate goal of each of those competitors is to achieve a monopoly. Although they may not recognize their actions as such. Their goal is to eliminate the other competitors. Society wants a maximum number of competitor to succeed, because they produce superior products which customers desire in order to remain competitive. Further, society wants the competition to essentially exist as a one-upping type of forever ratcheting in improvement of product value. However, any truly free market tends ultimately toward monopoly, as the competitors don’t seek to sustain their competition, they seek to defeat it, among major players. Humans, being human, often take by whatever means legally available, and sometimes illegally available, to defeat their competitors. Don’t most living things? Truly free-markets are inherently self-defeating, and require some degree of regulation to prevent monopoly. To prevent the the reduction, or elimination of competitors. There is a lot of business anti-competition warfare going just the same, as evidenced in some of the above events.
Some of those being nation-state strategic global economics based warfare. Government policies of various nations has frequently been been crafted to undercut the ability of businesses in global competitor nations to compete. So, in some cases, you’ll see a government enabled mass-undercutting of existing market pricing in certain global markets, so to eliminate the ability of foreign international firms to stay in business, thereby reducing supply. Thus moving that market toward monopoly, and eventually toward higher pricing. The typical counter for firms that are already established in a given market is to out-innovate their lower cost, often government subsidized, new rivals. That can work, so long as customers recognize and value those new innovations. The problem is, often they don’t. Or, product innovations are easily co-opted (stolen) by low cost competitors, who now don’t need to have significant R&D budgets of their own. The ultimate result is the same as above, a move toward monopoly, just on a global international scale.
From here there's no other following than into hard lines politics...
I'd rather call them "runaway markets" 🙂
I'd rather call them "runaway markets" 🙂
Mail from China to USA has been heavily subsidized by the USPS, though more recently rates have risen..
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For those who don't think semiconductors are political, read this and try to still maintain that position:
https://www.simonandschuster.com/books/Chip-War/Chris-Miller/9781982172008
https://www.simonandschuster.com/books/Chip-War/Chris-Miller/9781982172008
Interesting...I wonder who pays these guys the fuel then...they seem to be taiwanese not chinese...
https://en.m.wikipedia.org/wiki/Evergreen_Marine_Corporation
Attachments
Read a CNN article on this after reading your post. So it's a UN thing the US signed up to and USPS are basically forced to carry packets at below cost and they're losing money hand over fist doing it. Meant to benefit developing nations.
Done with good intent but by the looks of it widely abused.
Everything is political sooner or later. Sooner if it directly affects power or money...
I hope you got all the chips you needed for the next 10 years or so cause I see no audio chip made for a decade from now anywhere on the face of the Earth unless there's a need for more millitary portable radiocoms..
We might go discreet and small diy bussinesses have once again the chance to sustain the audiophiles, diy emmergency lighting and...the war efforts !!!
Either way, if nothing major happens to people's psychology within a few months, I suspect all world's chip manufacturing capabilities would be used for drones and rockets guiding systems...I trully hope I'm wrong here unless this is already happening.
Thus I may have an answer to the topic's title question which would be : the "special operations" democratically spread throughout the planet!
We might go discreet and small diy bussinesses have once again the chance to sustain the audiophiles, diy emmergency lighting and...the war efforts !!!
Either way, if nothing major happens to people's psychology within a few months, I suspect all world's chip manufacturing capabilities would be used for drones and rockets guiding systems...I trully hope I'm wrong here unless this is already happening.
Thus I may have an answer to the topic's title question which would be : the "special operations" democratically spread throughout the planet!
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"In Italy for thirty years under the Borgias, they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace, and what did that produce? The cuckoo clock."
Orson Welles: The third man.
Not saying it's a view I support, but it's a POV...
Orson Welles: The third man.
Not saying it's a view I support, but it's a POV...
Well Jules Vernes said in a book that Wars are the main cause and ultimate goal of human evolution...the occurence of the opposite finger in primates was the main sapiens evolving weapon apparently.Some say that actually the whole biology is a weapon by itself, that all evolution has only one purpose, to make the ultimate's Universe weapon which might not even be us...but AI...Technology is mainly a weapon by itself, it's not ment to make us feel more comfortable, it's made to make us more effective in seizing power.
As for the swiss clocks...i'm sure I'll never wear a Michelangelo ...but this one needs no electric current to tell you when the workhours start or finish...Michelangelo told us that we should all lay on churche's walls staring into God's infinity...
As for the swiss clocks...i'm sure I'll never wear a Michelangelo ...but this one needs no electric current to tell you when the workhours start or finish...Michelangelo told us that we should all lay on churche's walls staring into God's infinity...
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Seen footage of bonobos using sticks as tools to get ants out of trees as food.
Still, not a big step from there to wacking Ug over the head so you can take his ants...