How the PC cloners do it

Cover Story

Business Week

July 28, 1986

A small-scale clone manufacturer can crank out a copy of IBM's btread-and-butter PC/XT for as little as $ 400. (A large supplier, either domestic or Asian, can cut the cost to perhaps $ 350 by using fewer, more versatile chips and by purchasing components in large quantities.) Here's how they do it.

CONTROLLER CARDS

$65 for the pair of printed circuit cards that plug into slots on the mother board and run the disk drives and the video display. A controller for a hard disk drive is about $70.

BLACK-AND-WHITE SCREEN

$75 to $100 from Taiwan.

ROM/BIOS CHIP

$10 to $15. This chip holds the software that bridges the gap between the PC's hardware and its other software. The cost includes the ready-only memory chip, the expense of recording the bridge programs on it, and a royalty to an American software company.

MAIN CIRCUIT CARD

$100 to $150. The "mother board," typically from Taiwan, is the heart of the computer and includes the microprocessor and about $30 worth of memory chips. Because the strong yen has boosted prices for components from Japan, a high-volume U.S. computer maker can build a mother board with U.S.-made chips for around $75.

METAL CHASSIS AND COVER

$35 to $85. The guts of the computer are installed on the chassis; then the entire package is sealed inside a metal or plastic case.

ASSEMBLY

Under $10. Takes less than two hours by an employee earning about $5 an hour.

POWER SUPPLY

$30 to $100. From either Hong Kong or Taiwan, it attaches to the mother board and feeds the proper amount of current to various parts of the system.

FLOPPY DISK DRIVES

$60 each from Japan. Hard disks storing 30 to 60 times the information that fits on a floppy are available for $200 to $275.

KEYBOARDS

$20 to $50. From the U.S., Thailand, or Taiwan.

GRAPHIC: Illustration, no caption, JEAN TUTTLE