Fear has been mounting that the companies’ growing capacity in China will blunt the global seasonal recovery anticipated for the current quarter and squeeze already razor-thin margins. A spokesperson at Ritek brushed off such possibilities while CMC said its China-made discs mainly serve China’s domestic market, where demand is still growing strongly.
Both companies, however, said the future direction on CD-R prices remains unclear. After having pushed back schedules to raise prices, CMC said the latest hike may not arrive until the fourth quarter. Ritek said the CD-R sector will see “limited improvement” in the future, without elaborating on its pricing plans.
Ritek’s China efforts have dragged on for two years as it strived to meet regulations on foreign investment in the optical-storage sector. The company had spent US$15 million on equipment and been sent scouting for Chinese partners for months. The Chinese government requires foreign blank disc makers to set up joint ventures with local businesses and to acquire only brand-new equipment for production.