What is going on in Silicon Valley?

Consider:

  • Tired of defections to Facebook and elsewhere, Google is offering all of its employees a 10 percent salary increase.
  • Twenty-five employees fired by Digg were immediately approached by other companies, including Twitter and Groupon.
  • Talented college grads with no work experience are reportedly getting job offers paying $120,000 or (much)  more.
  • I.T. job postings are booming.
  • Start-ups are being acquired just for their employees. Derek Andersen: “[L]ook at the number of companies getting acquired for talent by Google, Facebook, and now LinkedIn. Seems like someone is getting bought for talent every other week. It hasn’t been that way for a couple of years. A top tier developer friend recently told me that he’s been encouraged by many to start a company and sell to Google/Yahoo in 6-months for a big check just to acquire the team. I believe it’s 100% realistic.”

Something is happening here, and it sure ain’t deflation.

Related:

Is The Silicon Valley Talent Shortage Getting Worse?

Silicon Valley and the  Talent Crunch

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Party like it’s 1999!

If Google wants to provide free servants to its employees, that’s fine by me. (Hey, I’m a happy GOOG shareholder.)

But we here at Inflation Watch would be remiss if we didn’t notice that something interesting is going on in the Silicon Valley labor market.

As Gawker reports:

Tech companies in recent months have reported a shortage of programmers as they snap up more and more talent. Google and Facebook are competing so fiercely over some engineers that half-million-dollar retention bonuses are not unheard of. And they’re not the only ones vying for talent; flush with venture capital, Twitter is on a hiring spree, as are AmazonFoursquareZynga and other startups.

Hiring sprees? Free servants?  Half-million dollar retention bonuses? Doesn’t sound like a deflationary spiral to me.


Hewlett Packard reports higher server prices

So says Reuters: “HP’s server business benefited from higher average prices. Revenue from industry standard servers surged 27 percent.”

Note also the bottleneck in components for laser printers: “Sales of laser printers, however, were hurt by supply constraints.” This presumably means higher prices down the road.


Price of personal computers to rise for first time in six years

Financial Times reporter Robin Kwong says that PC prices will increase this year due to shortages of semiconductors and other components:

The cost of assembling personal computers will rise this year for the first time in six years because of shortages in some key components, industry analysts have forecast.

The cost of semiconductor components in computers has fallen by an average of 7.8 per cent a year since 2000, but is set to rise 2.8 per cent this year, according to data from Gartner, the research consultancy.

This is almost entirely attributable to a 23 per cent increase in the price of D-Ram memory chips . Those chips, which are needed in every computer, make up about 10 per cent of a PC’s overall cost.

“In general, there is a steady drop in the cost of a PC every year. If component prices are flat or even increasing, that means they are outperforming expectations,” said Ben Lee, principal research analyst.

The cost of flat-screen monitors was expected to increase by about 20 per cent this year because of shortages, Mr Lee said.

Other components in short supply include hard drives and optical disc drives.

The shortages are part of the aftermath of the financial crisis, which led many manufacturers of technological components to delay investment plans.


LED Chip Prices Increased 50% This Year

DigiTimes reports that LED chip prices increased 50% this year. An on-going supply shortage is sure to drive prices even higher in 2010:

“The global supply of LED chips will remain short over the next two years due to increasing use in LCD panel backlightings and even faster increases in lighting applications, according to Neo-Neon Holdings chairman Ben Fan…

…LED chip price has increased by 50% in 2009 as clients have been willing to pay more to secure supply, Fan said.”


DRAM prices to rise again next year?

PC World:

The global DRAM industry will see higher prices per chip next year than in the past three because the global recession has forced many chip makers to reduce spending on new factories, the head of Japan’s Elpida Memory said Tuesday.


Taiwan chipmaker will raise prices 20% next month

From the China Post:

Nanya Technology Corp., Taiwan’s biggest computer-memory chipmaker, plans to raise prices 20 percent next month because of rising demand, Vice President Pai Pei-Lin said. The company increased prices by 20 percent this month from September, after boosting them 35 percent in the third quarter from the preceding three months, Pai said.

Related: Via the Wall Street Journal:

Contract prices of the dynamic random access memory chips widely used in personal computers increased sharply during the latter part of October, DRAMeXchange, a Taiwanese online chip clearinghouse, said Thursday. The average contract price of the mainstream 1-gigabit double-data-rate-two chip that runs at 667 megahertz rose 15.7% to US$2.06 from US$1.78 in early October, DRAMeXchange data showed.