Digitimes reports that many producers of CD and DVD recordables have seen
their gross margins decrease. The margins were mainly down because the companies
turned away orders when the prices were too low. This decreased their capacity
utlization to about 70% on average. Recordables also became slight less
profitable due to higher polycarbonate costs. Another reason is that there is
heavy competition which is responsible for a continuing price drop of recordable
discs. Amongst the companies affected are the large manufacturers such as CMC,
Prodisc and Ritek.
Gross margins drop for Taiwanese optical disc
makers
Company
3Q (%)
4Q (%)
Q/Q drop (pp)
Note
CMC
13.5-16
12-14
1.5 to 2
More profitable 16x DVD discs account for
15%-20% of total revenues this quarter, hence decreases in gross margin
are relatively small
Ritek
13.5-16
12-14
1.5 to 2
As above
Prodisc
<10
7
Up to 3
Optodisc
<10
7
Up to 3
Produces DVD discs only, with 16x discs
accounting for 3% of total revenues this quarter
Gigastorage
>10
8
More than 2
Lead Data
<10
3
Up to 7
Source: Digitimes.com
