CMC Magnetics and Ritek, the two top optical disc producers in Taiwan, saw their gross operating profit rates drop sequentially at least four percentage points in the second quarter.

CMC went from 36% in the first quarter to its current 29%, while Ritek dropped from 29% in the first quarter to 25% now, according to the two companies.

The decrease was due to reduced OEM prices, the two companies pointed out. However, OEM prices will not fall further and may rebound based on orders received at the ongoing Computex 2004 trade show, two companies indicated.

Prodisc Technology, the third largest disc manufacturer, has maintained its gross operating profit rate of around 35% since the beginning of this year.

Though 8x DVD discs are the mainstay of the three companies’ shipments, production of 16x DVDs is expected to pick up in the next quarter. The production schedule depends on sales of the corresponding 16x DVD drives/burners, the three companies said. CMC indicated that its OEM quotation for 16x DVD-R is only US$0.01-0.02 per disc higher than that for 8x DVD-R discs.