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CD-R Producers Consolidate into Larger Operations
September 3, 2001 (TAIPEI) -- CMC Magnetics Corp. and Ritek Corp. are in the process of intensifying their merger activities now in a bid to increase their market share and lower production costs.

Their new round of active merger moves has been leading to a situation in which the larger recordable compact disc (CD-R) producers' scale is expanding further, while the development of smaller scale ones is limited.

CMC Magnetics, a leading local CD-R maker, announced its plan to buy an Ireland-based recordable compact disc plant, which manufactures both CD-Rs and rewritable compact discs, or CD-RWs, from Japan's Mitsubishi Chemical Corp. as part of the company's global integration efforts.

While Ritek, the largest scale local CD-R producer, is now actively in negotiations for buying the overseas plant of Japan-based Ricoh Co., Ltd., with monthly production capacities of 1 million to 2 million units of CD-Rs. In the past, Ritek produced CD-Rs on an original equipment manufacturing basis for Ricoh.

The board of CMC Magnetics has approved the firm's plans to acquire Mitsubishi Chemical's subsidiary in Ireland, valued at less than US$10 million and with a monthly capacity of 5 million units, to strengthen its global logistics capabilities.

It is widely believed that the rivals' competition to merge smaller scale CD-R producers aims to avoid the anti-dumping charge by European firms. In addition, the move showed that Japanese CD-R producers are gradually retreating from the highly competitive market due to cost concerns.

Actually, CD-R firms have been actively diversifying their production bases recently. Ritek, as one of the world's largest optical storage media makers, earlier announced the set-up of a Chinese subsidiary to produce CD-Rs and opto-communication products.

A senior Ritek official said that his company plans initially to invest US$2.5 million in the subsidiary, which will be located at Kunshan, in Jiangsu province. Ritek said it may consider setting up the firm with a partner in China.

The subsidiary will produce CD-Rs in the initial stage, and gradually expand into the production of other opto-communication products.

(Commercial Times, Taiwan)

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