OEM quotes for blank CD-R discs have dropped to below US$0.10 due to oversupply arising from smaller than expected demand, according to industry sources in Taiwan.
The lower than expected demand for CD-R discs is mainly because brand and retail channel clients in the US and Europe had replenished their inventories in the first quarter of 2007 and therefore placed few OEM orders this quarter. Additionally, the unexpectedly strong sales of digital music players around the world has diminished demand for CD-R discs, the sources pointed out.
In response second-tier makers in Taiwan have cut prices to compete for few OEM orders resulting in the low OEM price levels, the sources indicated. In addition to CD-R discs, they have reduced OEM prices for blank 4-8x DVD+R/-R discs to as low as US$0.12, the sources noted.
Despite the OEM price fall, CMC Magnetics, Taiwan's largest maker of optical discs, will stick to the strategy of profitability as the first-priority consideration and has declined low-price orders, according to company vice president & spokesperson Andria Wong. Blank CD-R discs with 650MB in storage capacity are mainly used to record music and thus sales of such discs have been negatively influenced by the selling of digital music players, Wong pointed out. Although the global demand for CD-R discs has decreased, CMC is optimistic about receiving OEM orders for 4.7GB DVD+R/-R discs, Wong indicated.
In addition to decreased demand for CD-R discs, makers of optical discs in Taiwan will soon suffer an increased cost of optical-grade polycarbonate (PC), the sources indicated. International prices of optical-grade PC had dropped from a record high level of US$3.5/kg to US$2.4-2.5/kg but recently rebounded to US$2.7-2.8/kg due to hikes in the international price of crude oil, the sources pointed out.
