Contract manufacturing prices for DVD recorders in Taiwan are likely to fall 20-30% in 2004 from the current average of below US$250, according to DigiTimes.com. Increasing supply of key components such as pick-up heads (PUHs) and chipsets, volume production of DVD loaders by Japanese and Taiwanese makers and possibly new competitors from China will drag Taiwanese makers into a price war over orders next year, the sources said.

DVD recorder vendors, including Sanyo Electric, Pioneer and Ricoh of Japan and BenQ, Lite-On IT, Quanta Storage and Behavior Tech Computer (BTC) of Taiwan, have been stepping up production of DVD loaders this quarter to boost sales.

Each vendor could ramp up its monthly loader production to over 100,000 units, or even to 200,000-300,000 units, in the first quarter of next year, the sources said.

The increasing supply of loaders will reduce the technological entry barrier for manufacturing DVD recorders and attract Chinese makers to jump on the bandwagon, the sources said.

In line with declining contract prices, retail prices for DVD recorders are expected to fall from the current level of US$349-399 to US$299 and below in the world markets next year, the sources said.