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The optical disk business gets tougher

Posted: 07.07.03

Reports from Taiwan indicate that high-end DVD vendors are going to see further price pressure. In 2002, Media-Tek gained considerable market share with its chips that integrated servo and MPEG-2 decoder. According to some estimates, MediaTek holds 50% of the worldwide DVD market and 70% of the market in China. ALi came up from be-hind with their own integrated solution and made significant gains in the market as well. The company just started shipping their integrated M3351 chip at the end of the year. It is predicted that ALi will ship over 200,000 units of its inte-grated chip in the second quarter of 2003.

Now VIA plans to get into the busi-ness with a new division, VIA Optical Solutions. All three companies are plan-ning chips that integrate RF ICs as well as the decoder and the servo controller.

The companies, MediaTek, ALi and VIA Optical Solution plan also to introduce integrated products for 52xCD-RW drivers as well as DVD players in mid-2003. Plans call for production in 0.18-micron. The companies say they’ll ship products by the start of 2004. The end result will be to knock about another 10% off the prices. According to reports from Taiwan, prices for the CD-RW drive chips and RF ICs are down to $8 or $9, but we imagine it’s even lower when the bargaining starts. It’s been pretty hard for companies to get more than 10 bucks for DVD chips for a while now.

Those DVD guys are pretty tough and MediaTek is one of the toughest of the bunch, and the company has reported in-creased revenues for their most recent months. The company reported revenues of NT$2.92 billion ($84 million U.S.) in April, a 6.5% increase year over year. The company says they expect may to come in at about the same amount. The company reported revenues of NT$3.02 billion ($92 million U.S.) in March. For the first quarter of 2003, the company reported $8.6 billion ($247 million U.S.), a 4.7% decrease compared to the previous quarter but a 23.5% in-crease year over year. On the bottom line, MediaTek reported a profit of NT3.802 ($109 million U.S.). The company says the solid quarters are a direct result of the company’s success in DVD. (Conversions from Taiwanese dollars are based on a rate of $1 U.S. = NT$0.0288.)

MediaTek is ramping up to ship DVD+RW and DVD-RW chipsets in the second half of 2003. The company says they expect to have a piece of the record-able DVD action, specifically DVD+RW, in 2004. Both MediaTek and ALi are ex-pecting an increase in demand for their optical drive parts including CD-RW. MediaTek sells to Quanta Storage and Lite-On in the PC business, and ALi sells to AOpen. Prices are going to come under considerable pressure as VIA Opti-cal Solutions (VOS), Sanyo, Toshiba and Sunext Technology also enter the fray.

According to DigiTimes over 12 million DVD+RW drives will ship in 2003 and 40 million will ship in 2004. In general, DigiTimes gets their information from MIC (Market Intelligence Center). In fact, MIC says Taiwan shipped 79.40 million optical drives in 2002 including CD-RW and combo drives. Taiwan shipped 28.51 million CD-RW drives in 2002 and 1.66 million combo drives. Global sales of CD-RW drives reached 60.61 million and combo drives reached 19.36 million combo drives. In 2003, says MIC, the numbers could grow to 67.80 million CD-RW drives and 30 million combo drives with Taiwan shipping 36.10 million CD-RW drives and 5.10 million combo drives. In 2003, MIC pre-dicts that Taiwan’s shipments will grow 5.4% to 83.70 million units.

The researchers also warn that Taiwan’s enthusiasm may yet get the better of it. MIC warns of industry oversupply as new companies enter the According to DigiTimes over 12 million DVD+RW drives will ship in 2003 and 40 million will ship in 2004. In gen-eral, DigiTimes gets their information from MIC (Market Intelligence Center). In fact, MIC says Taiwan shipped 79.40 million optical drives in 2002 including CD-RW and combo drives. Taiwan shipped 28.51 million CD-RW drives in 2002 and 1.66 million combo drives. Global sales of CD-RW drives reached 60.61 million and combo drives reached 19.36 million combo drives. In 2003, says MIC, the numbers could grow to 67.80 million CD-RW drives and 30 million combo drives with Taiwan shipping 36.10 million CD-RW drives and 5.10 million combo drives. In 2003, MIC pre-dicts that Taiwan’s shipments will grow 5.4% to 83.70 million units.

The researchers also warn that Tai-wan’s enthusiasm may yet get the better of it. MIC warns of industry oversupply as new companies enter the market.