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Digitimes Spin Vs. What's REALLY going on w/ CMC+Ritek

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Digitimes Spin Vs. What's REALLY going on w/ CMC+Ritek

Postby dolphinius_rex on Mon Nov 14, 2005 1:52 pm

Recently there was a post on CDRLab's front page regarding CMC and Ritek generously lowering their prices on 8x DVDRs from $0.20 to $0.18 USD per disc for distributors and OEMs. The whole article posted by Digitimes is reproduced here for your convenience:

CMC Magnetics and Ritek, the top two producers of optical discs in Taiwan, have lowered OEM quotations for 8x DVD+R/-R discs from US$0.20 to US$0.18 for retail chains and distributors in the US, according to industry sources.

The price reduction was due to CMC and Ritek wanting to clear their inventories of 8x DVD+R/-R discs as quickly as possible, for many second-tier Taiwanese makers have begun volume production of 8x DVD+R/-R discs, according to the sources. CMC and Ritek have been shifting production to high-end 16x DVD+R/-R discs to avoid price competition with these relatively small makers, the sources pointed out.

Because of the price cut, CMC’s estimated October revenues of NT$2.735 billion rose by only 1.03% from September of this year while Ritek’s October estimate of NT$2.219 billion slipped slightly even though this quarter is traditionally the peak sales period, the sources indicated.


Ritek and CMC claim that they're trying to get rid of old stock now that second tier manufacturers of media are making large volumes of 8x DVDRs. Many of you are probably already noticing that most of these second tier manufacturers have been making 8x DVDRs in large volumes for most of this year or longer!! In fact many are switching to 16x media themselves at this point!! :o

So why *ARE* Ritek and CMC dropping their prices? Perhaps it's a generous christmas gift for the world? Or maybe BestBuy bought the two CEO's a couple of new cars each?? Or maybe it's the fact that CMC and Ritek have bank bonds in excess of 200 million USD each, coming to term in the early new year (2006)? I don't know about you guys, but my money's on that last one :wink:

Although we've heard nothing publically about it, sources deep within the industry have reported to me that CMC has to make good on a ~$250 million USD bank bond, and Ritek a ~$200 million USD bank bond, early next year, and have become completely desperate to sell all their available product ASAP in order to make shareholders happy, and keep the books LOOKING good. Of course this will come back to haunt them in the long run, since they're losing money left right and centre with these prices already, but these companies tend to not look at the future when the present is messed up.

So what does this mean for distributors and OEM customers? Nothing much for the moment actually. Most current distributors of Ritek already know better then to buy in at the first price drop, and I'm sure most of CMC's bigger customers are aware of this too. It's expected that as the new year gets closer and the bank's deadline begins creeping up on them, we can expect a "second wave" of price drops! Likely we'll see $0.15 USD for 8x DVDRs.

So what does this mean for the average consumer? While, lower prices for sure.... but also lower quality. Both Ritek and CMC will be attempting to liquidate as much product as possible, so it won't be too surprising to see B grade product mixed with A Grade product in order to fill orders. Also, manufacturing machines will probably be pushed harder then usual to lower overall production costs, and create more product to blow out.

So at this point I'd like to say don't stock up now, but wait.... wait just a couple more months (boxing day will be great I'm sure), and into the new year we should see some incredible prices! But remember that you also get what you pay for!

To those of you who are small time distributors, I've received word that Ritek and CMC are so desperate for sales, that if you pay cash you can actually negotiate pretty close or even to the same price as the big distributors.... but shhhhh, don't tell Meritline! :wink:
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Postby Scour on Mon Nov 14, 2005 8:08 pm

Hello!

Yeah, lower prices :)

But I don´t buy any Ritek DVD R next time, have to many R03 #-o

CMC? Looks better, maybe that :)
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Postby dolphinius_rex on Mon Nov 14, 2005 10:30 pm

Scour wrote:Hello!

Yeah, lower prices :)

But I don´t buy any Ritek DVD R next time, have to many R03 #-o

CMC? Looks better, maybe that :)


I'm not sure how Europe's anti dumping laws will affect things though.... it probably won't be as dramatic.

We may see smaler brands like Prodisc, Optodisc and Moser Baer, become better known for quality then Ritek though :wink: They certainly won't be cheaper anymore!! :o
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Postby Scour on Tue Nov 15, 2005 1:21 pm

dolphinius_rex wrote:
We may see smaler brands like Prodisc, Optodisc and Moser Baer, become better known for quality then Ritek though :wink: They certainly won't be cheaper anymore!! :o


So let´s wait, hope and see ;)
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Postby RJW on Tue Nov 15, 2005 1:56 pm

dolphinius_rex wrote:
Scour wrote:Hello!

Yeah, lower prices :)

But I don´t buy any Ritek DVD R next time, have to many R03 #-o

CMC? Looks better, maybe that :)


I'm not sure how Europe's anti dumping laws will affect things though.... it probably won't be as dramatic.

We may see smaler brands like Prodisc, Optodisc and Moser Baer, become better known for quality then Ritek though :wink: They certainly won't be cheaper anymore!! :o


Prodisc known for better quality as ritek ? :-?
So far the only decent and consistant Prodisc media I have seen had MCC code and was branded as verbatim. (The stuff with MCC code and not sold as verbatim still sucked !)
Also Prodisc still has bonding issues like TY.
Optodisc - WEll they have still lot's of work to do because with the current stuff on the european market it would be even more gambling as Ritek.
MBIL - Hmm I don't know what to think of that one. MBIL has put some very good disc's on the european market still there seem to be some issues with some products of some of there premium OEM's so I don't know what to think of it.
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Postby dolphinius_rex on Tue Nov 15, 2005 2:17 pm

RJW wrote:Prodisc known for better quality as ritek ? :-?
So far the only decent and consistant Prodisc media I have seen had MCC code and was branded as verbatim. (The stuff with MCC code and not sold as verbatim still sucked !)
Also Prodisc still has bonding issues like TY.
Optodisc - WEll they have still lot's of work to do because with the current stuff on the european market it would be even more gambling as Ritek.
MBIL - Hmm I don't know what to think of that one. MBIL has put some very good disc's on the european market still there seem to be some issues with some products of some of there premium OEM's so I don't know what to think of it.


All I was really saying with that is that the smaller companies can not compete on price, so all they can do at this point is try to focus on quality while the big boys go nuts like a HongKong plant :o You know how much I hate all things Prodisc, so when I say it might happen, it's not that I particularily want it to, I just think it's an option for them if they are capable of making it happen (which I don't honestly know, since like you, I haven't seen much stable Prodisc). As for Optodisc, I know you live in Europe, as does many members of this forum, but Optodisc has almost no presence or interest in Europe, and you already know most of the media there is crap. Even their A Grade OEM's don't have the same stability as the media sold in North America. And as for MBIL, I think they're capable of quality, but it remains to be seen what they decide to do in the long run.
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Postby Scour on Tue Nov 15, 2005 2:17 pm

RJW wrote:Prodisc known for better quality as ritek ? :-?
So far the only decent and consistant Prodisc media I have seen had MCC code and was branded as verbatim. (The stuff with MCC code and not sold as verbatim still sucked !)
Also Prodisc still has bonding issues like TY.
Optodisc - WEll they have still lot's of work to do because with the current stuff on the european market it would be even more gambling as Ritek.
MBIL - Hmm I don't know what to think of that one. MBIL has put some very good disc's on the european market still there seem to be some issues with some products of some of there premium OEM's so I don't know what to think of it.


Prodisc R03 shows very good results with many burners, F01 shows good results, too, but only in a few writers.

Optodisc -R-media still need much improvement, 16x-media I don´t know.

MBIL shows some very nice scans with +R-media, but I still don´t sure if the media is consistant.
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Postby dolphinius_rex on Thu Dec 22, 2005 12:31 pm

Further to my first post on this matter, we now see that Digitimes has once again given their best friends a way out of the situation they've put themselves in.... once Ritek and CMC have made enough money dumping their crap media on unsuspecting markets (a lot of Dysan brand appearing all of a sudden don't you think?), they can call "Media Shortage!!" and raise all the prices back to where they were before.

Full propaganda filled article here:
http://www.digitimes.com/systems/a20051222A7032.html
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Postby Ian on Thu Dec 22, 2005 12:48 pm

Yeah, todays article was kinda surprising considering they just ran one a couple of weeks ago showing that media manufacturers would easily exceed demand.
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Postby RJW on Fri Dec 23, 2005 5:11 pm

Well the story is a little bit more complex.

Point is some manufacturers (CMC & ritek & Prodisc & Optodisc) have still a lot of media which is 8x or lower !. (Based on the fact that some large wholesale media distributers currently have a lot of 4x media for sale !)
Now point is that compannies want to get away of this media now because lower speed media get's less and less valuable.
Who wants 4x media if it's hardly cheaper as 16x is what the masses think !!
So to move to 16x media and to make the market healthy quite some compannies are selling what they can.

So what's the truth about shortage. Well incase of the market expanding very big the prediction is that there probally will be not enough 16x media produced by Taiwanese manufacturers. Now manufacturers can do 2 things buy more lines and hope that it's enough. Or hope that this shortage will give them the opportunity to make the market healthy which means that they won't make mayor losses this season.
It seems that taiwan inc. (Which I mean the whole taiwanese market) has with a majority chosen to gamble for the healthy market option.
The few taiwanese manufacturers that have enough money have chosen to mostly invest this in next generation formats. Because who from these guys is able to do mass generation of production of the next generation formats can serious make some profits.
There is one mayor risk-factor. What will other manufacturers do.
To be more specific what will MBIL and the chinese manufacturers do.
European and American(MAM) and Japanese manufacturers are probally to small to play a important role in it. Also japanese manufacturers will probally try to go to jump on blu ray and HD-DVD for the majority as fast as they can probally sacrificing DVD and cd production capacity a long the way.

So if the expectation is that big then there might be a shortage from the taiwanese side. A worldwide shortage however is something I not expect.
Probally some Hongkong manufacturer (maybe infosmart or sunny or UME disc ) will try to get a much better market position because these compannies can still ramp up there production much more as what we currently get from them in Europe and America.
The main question will be will they use fake codes to secure compatability or will the fact that there increased market position be enough to get support for there own codes.
Hmm tough question.
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Postby Scour on Fri Dec 23, 2005 8:04 pm

Nice explanation, RJW :)

That´s really very complex
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