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Ritek to Scale Up CD-R Quotation after Renewing Patent Contract with Philips

April 19, 2001 (TAIPEI) -- Ritek Corp. is due to sign a new CD-R patent contract with Dutch giant Philips Electronics NV before long, heralding a price rise in the near future.

CD-Rs quoted at between US$0.20 and US$0.23 apiece at present may report a monthly rise of around 20 percent in price in response to the patent cost and supply shortage. By the end of the year, Ritek's CD-Rs are expected to be priced at US$0.40 to US$0.50 apiece.

After CMC Magnetic Corp. made its peace with Philips for the sake of smooth CD-R deliveries, Taiwan's CD-R makers decided that their best interests were served by a reconciliation with the Dutch high-tech giant.

Taking a realistic view, Ritek has also decided to swim with the stream so as not to lose its dominance in the CD-R industry due to a suspension of its license. Ritek revealed that it had received approval from its clients to shift the patent cost onto the price quote. Besides, the company predicted that its CD-R supply would short fall of demand in the second half of the year, as its production schedule has been fully arranged. Therefore, Ritek's upward adjustment in the CD-R quotation may have been in the pipeline.

According to the president of Ritek's media marketing unit, Ritek has acquainted its clients with the possibility of a price rise in its contract manufacture of CD-Rs and has been given to understand that a price rise of between US$0.10 and US$0.20 would be acceptable. As Ritek has no capacity available until August, the shortfall in the supply will also bring up the CD-R price. The growing belief shows that the CD-R quotation will rise to US$0.40 to US$0.50 per piece by the year's end.

Ritek called for a restricted expansion in CD-R production to help sustain a rebound in the CD-R price. The company said that the demand and supply of CD-R would reach a balance in 2001 according to the calculation based on the current gross production, provided that Taiwan's CD-R makers restrained their capacity expansion.

Philips has suspended the patent authorized to Ritek for three months, producing the setback in the partnership with Ritek. The president clarified Philips' retraction as just temporary. He said that Ritek's joint venture CD-R plant formed with Philips in Germany was maintaining normal production. The disturbed production due to the disagreement with Philips over the patent fees in Taiwan's CD-R plant, which only manufactures 5 million pieces of CD-R for Philips, will have a limited impact.

As Ritek and Philips clinched a production contract with period of five year ahead of the outbreak of patent fees disagreement, the relationship between Taiwan's CD-R powerhouses and the Dutch giant is expected to be restored in the wake of the renewal of the patent contract.

(Commercial Times, Taiwan)

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