Fire at CMC Factory May Further Increase CD-R Prices

With a fire occurring at one of CMC Magnetics’ facilities recently, sources expect that an already tight CD-R supply will worsen and quotes may rise next quarter.

CMC Magnetics said today it is assessing the extent of damage done at a plant where a fire broke out early in the morning of March 2, according to a company filing with the Taiwan Stock Exchange (TSE).

The optical disc maker said the plant, located at Yangmei, Taoyuan County, is a relatively smaller plant. Although CMC stressed that the plant's structure, equipment, and goods are fully insured, sources said CMC’s monthly capacity will be reduced by about nine million units due to the fire.

The plant accounted for 10% of CMC’s overall CD-R capacity and CMC’s CD-R discs mainly support demand from major international brands, the sources stated. Since it takes at least three months to have CD-R discs validated, second-tier makers will not be able to absorb those orders and major competitors Ritek and Prodisc Technology will be the indirect beneficiaries of the fire, the sources indicated.

Global supply of CD-R discs has been tight due to transfer of capacity from CD-R to DVD+R/-R.

With CD-R production running at full capacity now, second-tier optical disc makers have planned to raise their quotes by 3% this month, while CMC and Ritek had originally planned to keep their current price levels. However, due to the fire, CD-R prices may increase next quarter, the sources said.

CMC had 19.1% of the global CD-R market last quarter, followed by 17.7% from India-based Moser Baer India (MBI) and 15% from Ritek, according to Japan-based consulting firm Fujiwara-Rothchild.

Story source: digitimes.com.