Lite-On IT, the world’s largest DVD-ROM and CD-RW drive manufacturer, will cut back DVD-ROM drive shipments next year due to high technology licensing fees and decreasing profit margins. Licensing fees for DVD-ROM drive technology costs about US$10 per unit, about one-third of a drive’s manufacturing contract price. If Taiwan-based companies cannot solve this issue, they will not be able to sustain profitable operations when DVD-ROM drive prices fall further, said Michael Gong, general manager of Lite-On IT’s optical disc drive business unit.

The company plans to ship more higher-margin CD-RW/DVD-ROM combo drives and cut DVD-ROM drive shipments back by 3-5% next year. It expects to ship 40 million optical storage drives in total, of which 15 million units will be CD-ROM drives, 10 million CD-RW drives, six million combo drives, six million to 6.8 million DVD-ROM drives and three million other products. Lite-On expects its DVD-ROM drive shipments to include about two million half-high type drives and four million slim-type drives.

The company indicated that it has already shipped combo drives to Fujitsu Siemens Computers and will ship 20,000 units to Gateway this month.