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Why Speaker Prices Will Skyrocket

post #1 of 26
Thread Starter 
Why Speaker Prices Will Skyrocket
By Jason Knott
Price of rare-earth metal used in speakers set to increase 40% on July 1.

In addition to skyrocketing prices for petroleum and copper that have affected the cost of cabling, there is another looming crisis for the electronics industry: the increasing price of neodymium, a rare-earth metal.

The magnets are instrumental in the manufacturing of some low-profile loudspeakers from Definitive Technology, Earthquake, Wisdom Audio, Totem Acoustic, BG Radia, and MartinLogan. Not all manufacturers use neodymium drivers, some use magnets made of ferrite, which has the same properties as neodymium but requires a larger magnet.



Due to the rising prices of neodymium, Shin-Etsu Chemical Co. Ltd, a neodymium supplier, raised its price by 40 percent, effective July 1. According to the Business China, it is only a matter of time before the move trickles down to U.S. manufacturers.

Business China says the price for both neodymium and dysprosium "continue to rise steeply due to mining restrictions and the cutting of export quotas for rare-earth minerals by China." China exports over 90 percent of the world's rare-earth metals and houses more than one third of the world's reserves, according to Business China. The market is controlled by the Chinese government, which in recent years has limited export quotas.

Click here to continue.
post #2 of 26
Ya I read about something similar in this months National Geographic magazine but it was regarding many of the technologies we use now using rare metals/earth to be created.

I am happy about this restriction and hope it enforces less waste, because let's face it me working at Futureshop when I see a shipment of 150 8gb Ipods I just shake my head as I know they are going to be still there for the next 4 months while we get yet another mass shipment in the next month.

It sucks for the people whom don't own speakers yet, and If anyone else reads this article the next time you see a special at BB or Futureshop with a buy 1 get other speaker for free, jump on that deal. Because this price hike is inevitable and will come much sooner than expected.
post #3 of 26
Here's a related article from January 2010 titled "Concern as China clamps down on rare earth exports" -

http://www.independent.co.uk/news/wo...s-1855387.html
post #4 of 26
So the only place in the world where this metal can be found is China. Really?
post #5 of 26
no. it can be found in other places but no one else has sunk money into the mining business to mine such metals.
post #6 of 26
Quote:
Originally Posted by giedrys View Post

So the only place in the world where this metal can be found is China. Really?

IIRC its around other places but this is where the cheapest most abundant supply currently is concentrated in the world market as it was the easiest accessible place and cheapest to develop, but like any mineral source.

Just like oil or any other mineral, its easiest to get to some deposits first. You may never run out but other places are harder to get to and cost more. If I remember correctly there also was some sort of NIMBY or environmental concerns for development of other locations. If this is a political driven shortage situation other economical sites may have not been fully developed as alternate sources earlier as they might have been seen as poor investments earlier before this situation developed.

Anyone have any idea how much impact this kind of material source additional cost would add to the actual product cost of speakers?
post #7 of 26
Quote:
Originally Posted by giedrys View Post

So the only place in the world where this metal can be found is China. Really?

Quote:
Originally Posted by wywern209 View Post

no. it can be found in other places but no one else has sunk money into the mining business to mine such metals.

That makes sense.
post #8 of 26
Quote:
Originally Posted by wywern209 View Post

no. it can be found in other places but no one else has sunk money into the mining business to mine such metals.

Like no one else in the world? Russians perhaps?

Must be nice to be in business with 0 competition.

In what other industries this metal is being used?
post #9 of 26
Interesting article. I wonder how much Paradigm speakers are gonna go up by? And does that increase the resale value of certain brands.
post #10 of 26
Egadget posted an article about CE companies are looking for ways to replace these rare-earth materials in their electronics.

Which is good news. China is the WORST country to control these elements. They are doing so just to increase profit for the state and strangle the rest of the world.

No offense to anyone here from China; I just have a problem with your nation.

/As I am sure you may have issue with the US too.
post #11 of 26
Quote:
Originally Posted by giedrys View Post

So the only place in the world where this metal can be found is China. Really?

The US did mine and refine many rare-earth materials. We had a steel industry and a robust manufacturing and textile infrastructure too. We can still buy it from them, the costs are just going way up.

We let it all go and 'off shored' it because it was cheaper in the short term and chased only the quarterly bottom-line . Maybe one day we can think more about the long term and not sell out our future for quarterly profits?

While this may have consequences for loudspeakers, it also has perhaps more mission-critical applications in high performance electric motors and superconductors. Also, Yttrium, Gadolinium, Erbium, and Thulium are among the rare-earth material China would like to keep more of for their own use. Anyone who manufactures or uses semiconductor or pumped lasers and technologies like PET scanners and X-ray machines might want to take notice or action.

Perhaps it will serve as a wake-up call that the US needs to be more self-reliant and more in control of critical technologies and materials. That hasn’t work so well for things like oil, steel and manufacturing however.
post #12 of 26
Quote:
Originally Posted by jntaylor63 View Post

Egadget posted an article about CE companies are looking for ways to replace these rare-earth materials in their electronics.

Which is good news. China is the WORST country to control these elements. They are doing so just to increase profit for the state and strangle the rest of the world.

No offense to anyone here from China; I just have a problem with your nation.

/As I am sure you may have issue with the US too.


I too have major issues with China. Living in the Philippines and reading how they are bullying their neighbours over the South China Sea explorations. Nothing would make me happier than to see that wretched despicable, over populated country crash and burn.
post #13 of 26
Quote:
Originally Posted by giedrys View Post

In what other industries this metal is being used?


US Military
post #14 of 26
Time to keep my speakers a whole lot longer , you would think someone isn't capitalizing on creating some synthetic compounds to replace these precious metals. What do I know.. Seeing on how it took almost 4 month to shut the oil valve off the cost of Mississippi, I have lost all faith in man kind doing miraculous events. So creating these rare metals would be the same thing as trying to knock out a hurling space meteor aimed to our planet, pretty slim!

DJoel
post #15 of 26
I wander, which percent of the total MSRP of the speaker is the price on the rare-earth elements used?
post #16 of 26
I think one of the new uses that has caused demand to skyrocket is the high performance electric motor used in hybrid and plug-in cars.
post #17 of 26
Quote:
Originally Posted by Victor View Post

I wander, which percent of the total MSRP of the speaker is the price on the rare-earth elements used?

good question. the markup is already very steep. i cant imagine its more than 5% of the MSRP anyways... but they will surely raise the prices a lot more than that now that they have an excuse to.
post #18 of 26
Quote:
Originally Posted by Victor View Post

I wander, which percent of the total MSRP of the speaker is the price on the rare-earth elements used?

When I was in the biz speakers had goodt margin at the dealer level, 40 to 60 points. So dealers paid about half give or take MSRP.

I believe the cost for materials (especially raw materials) to be a smaller factor than we may think. R&D, engineering, distribution, and marketing make up a majority of the costs associated with speakers.
post #19 of 26
Business China says the price for both neodymium and dysprosium "continue to rise steeply due to mining restrictions and the cutting of export quotas for rare-earth minerals by China." China exports over 90 percent of the world's rare-earth metals and houses more than one third of the world's reserves, according to Business China. The market is controlled by the Chinese government, which in recent years has limited export quotas.
post #20 of 26
The cost of used speakers will also start to go up. Maybe dealers can have a speaker trade-in day and pull out the old magnets. Just like the jewelry industry has gold buy backs!
post #21 of 26
I don't think the author of this article has much of an idea of what he is talking about. Media these days seems to be naught but fear-mongering. The cost of the magnets in most speakers relative to the cost of everything else is pretty small. The title of the article should have been modified to read "certain speakers," since some of the super-thin speakers use way more of these rare-earth magnets than normal speakers. If you are using normal speakers with plain-jane drivers like most of them use, you're not likely to see much price difference, IMO. In addition, the costs that are rising are those of the basic refined rare-earths. This again is a small portion of the cost of the magnets themselves, since the magnets need to be molded, sintered, baked and magnetized in their own manufacturing facility. I highly doubt that the prices of any speakers are going to "skyrocket." What will happen is as the price goes up, it will become more profitable for companies in countries who can't afford to pay so low as China's $0.25 an hour labor rate to start mining and selling their own rare earths.

Edited to add: I just clicked through and read the whole article. If you did as well, you'll see that the speaker manufacturer he interviewed even stated that the magnets are a very small percentage of the cost of the speaker and that they have no plans to increase their prices at this time.
post #22 of 26
Quote:
Originally Posted by dlarsen View Post

The US did mine and refine many rare-earth materials. We had a steel industry and a robust manufacturing and textile infrastructure too. We can still buy it from them, the costs are just going way up.

We let it all go and 'off shored' it because it was cheaper in the short term and chased only the quarterly bottom-line . Maybe one day we can think more about the long term and not sell out our future for quarterly profits?

While this may have consequences for loudspeakers, it also has perhaps more mission-critical applications in high performance electric motors and superconductors. Also, Yttrium, Gadolinium, Erbium, and Thulium are among the rare-earth material China would like to keep more of for their own use. Anyone who manufactures or uses semiconductor or pumped lasers and technologies like PET scanners and X-ray machines might want to take notice or action.

Perhaps it will serve as a wake-up call that the US needs to be more self-reliant and more in control of critical technologies and materials. That hasn't work so well for things like oil, steel and manufacturing however.

Amen brother!
post #23 of 26
There are huge deposits of REE's in Afghanistan, most noticably near the Pakistan border. A major reason Pakistan is counting the days when we leave. Also bordering China will also be a major player. China is currently building a new road in the west to link w/Afghanistan. The real war in Afghanistan is going to be for REE's. Green technology, all we'll do is move our dependence from the Middle East to Asia & South America. More than 20 different parts in a hybred car need REE's to run.
post #24 of 26
[Herron says Wisdom, like everyone, "is at the mercy of the market price." We have seen significant increases in the price of neodymium, but overall it represents a relatively small percentage of our overall manufacturing cost."

Wisdom is not anticipating a price increase based on the price of neo at this time, Herron says.]


So... "Why Speaker Prices Will Skyrocket" is really "Speaker Prices Will Not Skyrocket"

nice sensationalism there.
post #25 of 26
I wonder if this will also result in price increase for hard disk drives (not SSDs, but those with rotating platters). HDDs use rare earth magnets in the servo controller for the read/write heads.
post #26 of 26
This article lost all the credibility the moment that hey stated , under the 32 popular free standing speakers Quote:Bose, the biggest name in the world of loudspeakers .
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