Blu-ray discs

	Liao Sheng of mainland China offers both 8X and 16X DVDs. It plans to add 9.4GB blank DVDs to this selection.

Makers raise capacity and speed bars from 4.7GB and 8X. Current formats will keep lead despite Blu-ray's emergence.

Even with the emergence of Blu-ray as the next DVD standard, most manufacturers of optical discs in mainland China will continue to focus on traditional DVDs and CDs in the coming years. Taiwan suppliers, however, welcome the high definition (HD) successor, as it will diversify the market and offer them more opportunities.

Holding the mainstream are 4.7GB DVDs, with 16X recording speed gaining traction. Some makers are starting to produce 9.4GB single-layer double-sided discs in mainland China, while 8.5GB double-layer DVDs are popular in Taiwan because of niche applications in the gaming and home video markets. Taiwan makers are also offering water-resistant and inkjet-printable discs.

Prices of blank DVDs decreased by a few cents during the last six months. Makers expect price levels to stabilize as the costs of raw materials increase.

	Ritek of Taiwan can produce Blu-ray discs with up to 4X recording speed and 25GB capacity.

A 12 percent CAGR in DVD drive production is expected to happen in the next three years. This is based on the 8.85 percent y-o-y growth achieved in 2007, from IDC’s estimated worldwide disk drive production volume of 3.6 million units that year. With this development and the end of the HD format war, the blank DVD manufacturing industry is expected to experience a parallel uptrend.

Another welcome development for the optical disc line is the planned reduction of CD/DVD license fees by collecting organizations. The DVD6C Licensing Group (DVD6C), consisting of nine developers of DVD technologies and formats, announced such a plan with effective implementation starting January 2008.

The industry in mainland China has more than 100 blank DVD manufacturers by the end of 2007. Taiwan, meanwhile, boasts an active supplier base that includes Ritek Corp., CMC Magnetics Corp., Lead Data Inc., Gigastorage Corp., Prodisc Technology Inc. and Daxon Technology Inc.

	Ritek of Taiwan can supply HD DVDs on request.

Blank DVD production in mainland China has remained unchanged, except for makers’ efforts to upgrade storage capacity and recording speed. Recordable DVDs and CDs—DVD+R, DVD-R and CD-R—remain the dominant products, while only a few companies have ventured into DVD+/-RW disc production. Despite the Blu-ray standard, makers expect the traditional recordable DVD formats to continue dominating the mainland industry in the next two years.

Optical discs with 4.7GB capacity still occupy top position in output and sales, but suppliers are starting to increase the production of 9.4GB models. Most companies are also producing DVDs that support 16X recording speed.

In 2007, the 8.5GB blank DVD usually available in single-layer single-sided configuration became popular for a short period. As mainland suppliers expected, it would turn out to be a transitional product, having been overtaken eventually by 9.4GB single-layer double-sided discs.

At present, most makers are producing 4.7GB DVDs or both 4.7GB and 9.4GB DVDs. The mainland industry will be moving toward the 9.4GB direction in 2008.

Guangdong Yuedong Magnetoelectric Co. Ltd is among the companies that have started producing 9.4GB blank DVDs. The company has increased its production of 16X discs but 8X DVD discs still form the bulk of its output.

Guangdong Aolin Magnetic Industrial Co. Ltd produces 16X blank DVDs, while Liao Sheng Trading Co. offers both 8X and 16X DVDs. The latter is planning to produce 9.4GB blank DVDs in 2008.

Price competition in the low-end DVD sector is pushing most Taiwan suppliers of blank DVDs to create their own niche markets for higher profits. The island’s mainstream products include 4.7GB DVD+/-R, DVD+/-RW, DVD-RAM and 8.5GB double-layer DVDs. Sales of 8.5GB double-layer DVD+/-R discs are driven by the popularity of the Xbox 360 and 18X DVD burners, which are considered niche products.

Vanprasth Corp., which has been producing CDs and DVDs for almost 20 years, is now offering water-resistant, inkjet-printable DVDs. “Value add-ons are more important in this line. Otherwise, all available products are almost the same,” said May Wong, sales manager at Vanprasth.

Large-volume maker Ritek, one of the leading CD/DVD manufacturers in the world, is prepared to supply recordable and rewriteable Blu-ray discs (BDs) and HD DVDs to any buyer who may require them. Aside from double-layer 16X DVDs, the company can produce double-layer HD DVD-R/RW and 4X BD-R/RE discs, which are high-end products.

In 2007, Ritek accounted for 26 percent of the global output of blank HD DVDs, becoming the largest supplier of blank HD DVDs in the world. The company, however, acknowledged that the market for next-generation HD optical media is still under development. Although Ritek has the capability to provide these advanced DVDs, the traditional DVD line remains its top revenue earner.

Prices of blank DVDs slightly decreased in mainland China and Taiwan. On the mainland, prices went down by about 2 cents due to competition. Current prices are now almost at production cost levels, according to makers. They do not expect further reduction in the future.

Guangdong Yuedong, which targets the midrange market, lowered its quotes by about 3 cents. Its blank DVDs now sell for about 12 cents each. Guangdong Aolin’s blank DVDs sell for 13 cents each, or 2 cents lower than last year’s price. Liao Sheng’s DVDs are quoted at 11 or 12 cents each, dropping at least 2.5 cents.

In Taiwan, the price decrease affected mainly the low-end DVD line. Mainstream DVDs are priced about 14 or 15 cents each, excluding the royalty fee.

Plastic materials account for 50 percent of a DVD’s cost, license fee for 20 percent, dyes and reflectors for 18 to 22 percent, ink and protectors for 8 percent, and other materials for 2 percent.

Makers said the cost of raw materials, especially plastics, is increasing, which will help stabilize prices.

Suppliers’ blank DVD production output and sales revenue have generally grown in the past year. Most mainland manufacturers are export-oriented and OEM-ready. The average export ratio is 70 percent. All interviewed companies’ manufacturing facilities are certified under the ISO 9001:2000 standard.

Blank DVD has a 70 percent share of Guangdong Yuedong’s total production. Eighty percent of the DVDs are exported, and more than 50 percent of the exports are under the company’s in-house brand. North and South America are the main overseas markets, absorbing 70 percent of the company’s export shipments. Guangdong Yuedong achieved $50 million in sales revenue last year. It has a 200-member workforce.

At Guangdong Aolin, blank DVDs account for 40 percent of its total output, which is a 15 percent y-o-y increase. Ninety percent of the output is exported, with 80 percent going to OEM buyers. Guangdong Aolin’s sales revenue from DVD+/-R discs amounted to $10 million in 2007, at the time the company employed more than 600 workers.

Recordable blank DVDs also account for 40 percent of total output at Liao Sheng. The company exports 100 percent of its products. It mainly ships to EU countries, which receive 85 percent of total exports. The company achieved $10 million in sales revenue in 2007 and projects a sales value growth of 10 percent this year.

Ritek offers a comprehensive line of optical discs, including CD, CD-R/RW, 8cm CD-R, DVD, DVD-RW, 8cm DVD, HD DVD and BD. Aside from optical storage media, Ritek also produces flash memory and consumer electronic devices such as USB flash drives and MP3 players. Its three factories in Vietnam and Taiwan handle all manufacturing processes. All its production facilities are certified under the ISO 9001:2000 and QS 9000 standards.

Ritek has branch offices in mainland China, Taiwan, Vietnam, Europe, North America and North Africa. OEM/ODM business contributes the largest share in sales revenue, but the company is also keen on developing and marketing its own brand.

Vanprasth has been producing CDs and DVDs since 1989. It has 10 production lines dedicated to blank CD production. The company can produce 5 million blank CDs per month, achieving 80 percent capacity utilization. With 125 total employees, the company is able to conduct all manufacturing processes in-house. It sources polycarbonate from Japan and dye materials from Taiwan or Hong Kong suppliers. The company also manufactures digital photo frames.

Vanprasth exports 90 percent of its products to Central and South America and the rest to Asia. Private-label business contributes 90 percent to the company’s sales revenue. Vanprasth also uses its in-house D-more brand for exports.

Suppliers’ blank DVD production output and sales revenue have generally grown in the past year. Most mainland manufacturers are export-oriented and OEM-ready. The average export ratio is 70 percent. All interviewed companies’ manufacturing facilities are certified under the ISO 9001:2000 standard.

Blank DVD has a 70 percent share of Guangdong Yuedong’s total production. Eighty percent of the DVDs are exported, and more than 50 percent of the exports are under the company’s in-house brand. North and South America are the main overseas markets, absorbing 70 percent of the company’s export shipments. Guangdong Yuedong achieved $50 million in sales revenue last year. It has a 200-member workforce.

At Guangdong Aolin, blank DVDs account for 40 percent of its total output, which is a 15 percent y-o-y increase. Ninety percent of the output is exported, with 80 percent going to OEM buyers. Guangdong Aolin’s sales revenue from DVD+/-R discs amounted to $10 million in 2007, at the time the company employed more than 600 workers.

Recordable blank DVDs also account for 40 percent of total output at Liao Sheng. The company exports 100 percent of its products. It mainly ships to EU countries, which receive 85 percent of total exports. The company achieved $10 million in sales revenue in 2007 and projects a sales value growth of 10 percent this year.

Ritek offers a comprehensive line of optical discs, including CD, CD-R/RW, 8cm CD-R, DVD, DVD-RW, 8cm DVD, HD DVD and BD. Aside from optical storage media, Ritek also produces flash memory and consumer electronic devices such as USB flash drives and MP3 players. Its three factories in Vietnam and Taiwan handle all manufacturing processes. All its production facilities are certified under the ISO 9001:2000 and QS 9000 standards.

Ritek has branch offices in mainland China, Taiwan, Vietnam, Europe, North America and North Africa. OEM/ODM business contributes the largest share in sales revenue, but the company is also keen on developing and marketing its own brand.

Vanprasth has been producing CDs and DVDs since 1989. It has 10 production lines dedicated to blank CD production. The company can produce 5 million blank CDs per month, achieving 80 percent capacity utilization. With 125 total employees, the company is able to conduct all manufacturing processes in-house. It sources polycarbonate from Japan and dye materials from Taiwan or Hong Kong suppliers. The company also manufactures digital photo frames.

Vanprasth exports 90 percent of its products to Central and South America and the rest to Asia. Private-label business contributes 90 percent to the company’s sales revenue. Vanprasth also uses its in-house D-more brand for exports.