An expansion of DVD-ROM drive production is quietly under way, which manufacturers say would lower prices and raise the proportion of DVD-ROM drives in Taiwanese optical drive shipments to 30% on average this year, from the current 10%. It still remains a question when DVD-ROM will overtake CD-ROM as the main media- and data-reading format. Despite the lower prices and tighter margins that plague the CD-ROM sector, CD-ROM drives are forecast to hold well over 40% of Taiwan’s drive production this year, according to the Market Intelligence Center (MIC). Per-unit CD-ROM drive contract prices have dipped to as low as US$17, a level that may have hit bottom and left little space for further declines, according to the manufacturers. For DVD-ROM drives, however, they expect price quotes – currently nearing US$30 –to further drop to US$25-28 in the fourth quarter.

The shrinking price gap is a long way from the second half of 2001, when DVD-ROM drive contract prices were as high as US$45, double the price range of US$22-23 for CD-ROM drives.

Betting that cheaper DVD-ROM drives would encourage users to replace their aging CD-ROM drives, Taiwanese makers have been boosting shipments. The expansion has been low profile so as not to attract attention from foreign patent holders, to whom Taiwanese makers pay an average of US$10 or more per drive shipped.