SKC, one of Korea’s largest manufacturers of video tape, CDs, and CD-R recordable discs, and three other Korean CD-R producers, intend to file an anti-dumping suit against 30 Taiwan companies which, they claim, are selling their media in Korea at unfairly low prices. Both CMC and Ritek, the two largest Taiwan-based CD-R producers, are cited for unfair practices. SKC claims that Taiwan-made CD-Rs are being sold in Korea at $0.20 or less, whereas locally made media have ex-factory prices of not less than $0.25. The Korean market for CD-Rs this year is said to be about 70 million discs, and Taiwan-made product already claims about 70 percent of that market.

The European Parliament is also investigating the pricing situation on Taiwan-made CD-Rs. By the end of 2000, Taiwan manufacturers had captured about 71 percent of world demands for these popular media, and the low prices offered had already eliminated many of the CD-R producers in both Europe and the United States. TDK, one of the last of the major companies producing CD-Rs in the U.S., has announced that it is ceasing production at its Georgia plant in May. Other major Japanese producers that have already closed down their CD-R production facilities in the U.S. include Ricoh and Mitsui. Eastman Kodak, at one time the largest CD-R producer in the world, merged its interests with Matsushita two years ago, and these facilities are being converted to produce DVD-Video discs and recordable DVD products.

Ex-factory prices on CD-Rs are almost certain to increase substantially before the end of this year, due to stricter enforcement of licensing and royalty payments by Philips, which is the licensing authority for the patented technology involving CD and CD-R production. Many of the Taiwanese producers have ignored the need to obtain licenses and pay royalties on their outputs, and Philips has threatened to embargo their shipments into the U.S., Europe, and Japan unless they obtain licenses immediately. Since these licenses and royalties could add as much as $0.11 to the factory cost of a CD-R, it is very unlikely that twenty-cent discs will be available in Korea, or anywhere else, for much longer!

The first graph below shows MMIS’ newest estimates for production of CD-Rs by region of origin, and the second graph the demand levels (shipments into distribution) in each of the major markets of the world. Both graphs are for the year 2000.