Taiwan-based optical disc makers will receive significantly more OEM orders for CD-R and DVD+R/-R discs this quarter than in the second quarter of 2007, but will suffer unavoidable rises in the procurement costs of optical-grade polycarbonate and dyes due to continued hikes in the international price of crude oil, according to industry sources in Taiwan.
As brands of optical discs in the US and Europe as well as retail channels in Latin America have been placing OEM orders for discs to replenish their inventories, Taiwan-based makers will enjoy rebounding demand this quarter, which is traditionally a peak period, the sources indicated. However, OEM prices are expected to remain at the current levels of below US$0.1 for a CD-R disc, US$0.12 for a 8x DVD+D/-R disc and US$0.18 for a 16x DVD+D/-D disc, the sources pointed out.
On the other hand, procurement costs of polycarbonate are likely to rise to US$2.9-3/kg, increasing by 16-20% from the US$2.5/kg in early 2007, the sources indicated. In addition, cost of dyes will rise by 2-3% this quarter, the sources noted. Polycarbonate and dye together account for 30-40% of the total production cost of optical discs, the sources said.
Consequently, Taiwan-based makers will be faced with a challenge to keep their gross margins from dropping, the sources pointed out.
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