Taiwan disc manufacturers are operating at over 90% production capacity this quarter, up from 70%-80% despite price increases of approximately 10%, which were recently instituted by CMC and other Taiwan suppliers.
CMC Magnetics, the largest Taiwan-based original equipment manufacturer (OEM) of blank optical discs, has raised its OEM quotes for CD-R and DVD-R discs by 10% on average and some manufacturers in Taiwan have followed or will follow suit. Despite this, a few leading Taiwan-based manufacturers have received so many urgent orders for CD-R and/or DVD-R discs recently as to fully occupy their production capacities, according to industry sources in Taiwan.
Such full occupation of production capacity has seldom happened in the past two to three years, the sources indicated.
This may be because small manufacturers in China and Taiwan have stopped production or shut down and because clients' inventories have dropped from four to six weeks to a low level of two weeks or less and thus have been placing orders to replenish stock volumes, the sources pointed out.
For all Taiwan-based manufacturers of blank optical discs, the average utilisation of production capacity has risen from 70%-80% in the second quarter of 2008 to more than 90% this quarter, the sources indicated.
Due to the increased capacity utilisation and possible decreased costs of polycarbonate arising from recent oil price drops, these manufacturers may see gross margins rebound in the third quarter of 2008, the sources noted.
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