Taiwan optical discs makers will enjoy considerable profits in 2007

According to DigiTimes, Taiwan-based makers of optical discs will enjoy considerable profits in 2007 if price-cutting by industry players to grab orders stops. Taiwanese makers are still quoting prices lower than production costs in order to grab orders, according to CMC Magnetics chairman Robert Wong. CMC adjusted its operating strategy by declining low-price orders in the third quarter of 2006. As a result, CMC’s overall gross margin and profit rate are higher than those of other Taiwan-based makers.

Although the global supply of optical discs is currently short of demand, many Taiwanese makers are still quoting prices lower than production costs in order to grab orders, Wong pointed out.

CMC adjusted its operating strategy by declining low-price orders in the third quarter of 2006, Wong indicated. CMC has adopted an ERP (enterprise resource planning) system to automatically screen arriving orders and rule out those with requested prices lower than the company’s current production cost, Wong explained. In addition, CMC has invested a great deal in R&D to obtain more than 80 patents, enabling CMC to receive orders for more profitable products, Wong emphasized.

Source: DigiTimes