It is interesting to note that Digitimes had an article on Thursday, August 7, 2008 about the Optical Recordable Disc manufacturer, Prodisc, with CD-R, DVD-R, DVD+R and Dual Layer production lines in Taiwan and mainland China, clarifying it's position about the "rumors" that they were discontinuing optical disc product.
company chairman Ming-fa Lin:
""..Prodisc has invested more than NT$10 billion (about US$300 million) in production equipment of blank CD-R, DVD+/-R discs and has maintained a steady client base consisting of international vendors and overseas retail channels, the reason for not quitting production, Lin explained. Prodisc is negotiating with lending banks to seek their support for the company's planned turnaround and continuing production of optical discs.."
As reported by Digitimes IT news
This is after a report a day before in cens.com that Prodisc would be exiting the Optical business.
Essentially Prodisc is without capital and has plenty of troubles with Philips. It certainly would not be in Philips interest for Prodisc to exit the business although the issue is really with recordable CD production which is not as large a market as DVD which is not under the Philips royalty. The real issue is with the razor thin gross profits that translate into a loss every year and yet CMC, Ritek and Prodisc keep slugging it out. It's hard to imagine how Prodisc can continue but then it's hard to see how any of the Taiwan Optical manufacturers can continue. They continue to drop the cost of blank discs even though the manufacturing costs keep going up leaving no profit at all. They all are scrambling to shift over to other storage products like USB flash and flash cards. Prodisc has been working on a film production project producing brightness enhancement film (BEF) as well as LED lamps and aspherical polycarbonate ophthalmic lenses with a Japanese company, Omron.
These are the major manufacturers of inexpensive recordable CD-R, recordable DVD, and at least for CMC and Ritek: Blu-ray recordable manufacturing. They have driven the market hard in OEM and branded media making it a very non-economical operation. I'm certainly amazed that Prodisc would invest 300 million dollars for production equipment expecting a return on the investment.
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According to Digitimes Prodisc is planning to discontinue CD-R production. This is the continuing saga of the Philips action against several Taiwan CD-R manufacturers over royalty payments.
CMC, Ritek and Prodisc have been in negotiation with Philips since last year when the last license ran out. Digitimes had pointed out that the troubles for Prodisc really started with them publicly
protesting how unfair the royalty program is. Philips requested and received a request to seize assets of Prodisc in Taiwan which includes a manufacturing facility and money in a bank account.
Stay Tuned
This is a link to the full story Digitimes article
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Not sure if anyone noticed but Ritek, Prodisc and CMC (the big three of disc manufacturers in Taiwan) have not been paying Phillips royalties. It's been in the news lately; http://www.cdrlabs.com/news/byte/5720
Digitimes.com also had an article about this. There has been a lot of media coming into the U.S. from these companies at lower then normal pricing based on the royalty fee.
It's not that other brands are charging more it's they are paying the royalty. There was a new program called "Veeza" that was reducing the amount from .03 cents US to .025 US
Half a cent difference to get the three manufacturers to comply with licensing. They have have various reasons for not complying. Technically the media from these three companies is in violation in the U.S. and Europe at this point until this is settled. We have been staying away from it for that reason. I can remember several resellers being fined very heavily for selling un-licensed media before. That was a few years back now. Recently Phillips has become more serious about enforcing the fees.
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