Lite-On IT plans to increase DVD-ROM drive shipments to 300,000-400,000 units a month in 2002 and take the number two position in the global market. Once the company attains economies of scale, gross profit margin could be as high as 20%. At the same time, the company will lower its CD-ROM drive shipments. The company is the world’s third-largest producer of optical disc drives. In the first half of 2001, Lite-On IT shipped 6.8 million CD-ROM drives, second only to the 9.7 million units shipped by LG Electronics, and 755,500 DVD-ROM drives, ranking seventh on the global market. In July, Lite-On IT and JVC formed an alliance and established a production and marketing company in Hong Kong. The new partnership resolved the nagging problem of DVD-ROM technology royalties. DVD-ROM drives are gradually replacing CD-ROM drives, as the gap in price closes.