Although CMC Magnetics, the largest Taiwan-based OEM maker of blank optical discs, has raised its OEM price quotes for CD-R and DVD+R/-R discs by 10% on average and other manufacturers in Taiwan have following suit, a few leading suppliers have recently received so many urgent orders for these discs as to keep production at full capacity, according to industry sources in Taiwan cited by DigiTimes.

Rarely occurring in the past two to three years, sources speculate this heightened utilisation may be attributable to small blank disc makers in China and Taiwan stopping production or shutting down altogether as clients' inventories dropped from 4-6 weeks to a low two weeks or less and thus placing orders to replenish stocks.

As a result, manufacturers' average utilization of production capacity has risen to more than 90% this quarter from 70-80% in the second quarter of 2008 leading to gross margins rebound in the third quarter of 2008.

As for leading ODM/OEM drive makers, they are resisting calls from PC vendors to lower current quotes. Companies including Hewlett-Packard, Dell, Acer and Asustek Computer want sharp reductions in ODM/OEM prices of Blu-ray Disc combo and BD-ROM drives.

ODM/OEM quotes currently are in the $120-130 range for a BD combo drive and $95-100 for a BD-ROM drive. But PC vendors have asked for thoses prices to come down to $100 and $90, respectively, DigitTimes sources indicated.

However, none of ODM/OEM makers are willing to cut prices claiming they are unable to keep component costs down. And they are reluctant to sacrifice profitability for orders, the sources explained. As a result, the volume of BD drives shipped to PC vendors in the third quarter of 2008 may grow only slightly from the preceding quarter, the sources says.

Among the major BD drive ODM/OEM makers, Pioneer focuses on BD combo drives and Taiwan-based Lite-On IT concentrates on BD-ROM drives. Hitachi-LG Data Storage and Toshiba-Samsung Storage Technology produce both types of drives.

Story filed 13.08.08