Industrial Production and Capacity Utilization - G.17

Federal Reserve Microprocessor Price Index

A hedonic price index was developed to account for rapid performance gains in microprocessors (MPUs), the central processing units in computers. Hedonic price indexes use data on product characteristics to estimate what the change in product price would be if the quality of the product were held constant.

Prices for specific MPU models were collected from published wholesale price lists (1,000 unit trays) from Intel Corp. (See http://www.intc.com/pricelist.cfm) MPU scores on "benchmarks"-programs designed to test performance on common computing tasks-were used from System Performance Evaluation Corporation (SPEC). For an overall performance score, a geometric mean of composite scores for integer and floating point benchmark tests from SPEC® CPU2006 was used. (Data were accessed 7/1/2014. See http://www.spec.org)

To account for changes in the mix of computing end-use markets over time, the hedonic regression includes MPU product class (e.g. mainstream, performance, extreme) as reported by IDC, a company specializing in information technology industries. (See "IDC PC Processors by Intended PC System Type", December 2013.) To account for the impact on performance from other features of the computer used to test the MPU, the hedonic regression includes system memory, system vendor (e.g. Dell, IBM), and, for server systems, number of processors. The log-price of each MPU model was regressed on the performance score, control variables, and quarterly dummy variables. Coefficients on the dummy variables were used to construct a price index.

Separate indexes were created for MPUs used in desktop PCs and servers. Mobile system MPUs were not included because of limited data availability and the relatively small share of domestic production for this class of chips. Desktop and server indexes were weighted by global revenue shares reported by IDC to create a composite index.

Only prices reported on the first introduction of each model were employed to mitigate concern that transaction prices reflect discounts that evolve over the life of the model. (Often list prices were unchanged when closely related new models with better performance were introduced.) The date of model introduction was based on company statements. (See http://ark.intel.com )

The MPU price index is updated with new data for 2012 and 2013. The index was previously issued in 2013 with data for 2007 through 2011. The updated price index was incorporated into the industrial production index for semiconductors and related electronic components published on July 21, 2015, as part of the annual revision to the G.17 statistical release on industrial production and capacity utilization.

A comma-delimited text file containing the price index is available for download here.

Annual Microprocessor Price Index

Year	Index
2007	100.000
2008	59.145
2009	39.667
2010	21.261
2011	15.851
2012	11.164
2013	6.555

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