Hitachi-LG Data Storage (HLDS), the world's largest maker of optical disc drives, has lowered OEM quotes for slim-type DVD burners from US$33-35 in the third quarter of 2007, to US$30-33 this quarter, and this is expected to exert large competitive pressure upon Quanta Storage, the largest Taiwan-based maker of slim-type DVD burners, according to industry sources in Taiwan.

As HLDS, Matsushita Electric Industrial (Panasonic) and Pioneer last quarter quoted pricing 5-10% higher than Quanta Storage and Lite-On IT, the second-largest Taiwan-based maker of slim-type DVD burners, HLDS' reduced prices for this quarter are approximately the same as quoted by the two Taiwan-based competitors, leaving little room for the latter to lower their prices, the sources pointed out.

In addition, HLDS has reduced the gap in its OEM pricing between 9.5mm (thickness) DVD burners and 12.7mm models to grab orders for the former, and consequently many notebook PC makers/vendors have shifted orders, the sources indicated. This will also bring negative impact on Taiwan-based competitors because they focus on 12.7mm DVD burners, the sources explained.

However, Lite-On IT is expected to suffer much less than Quanta Storage because the former's OEM production is mainly for half-height models, primarily for use in desktop PCs.

In light of continual price-cut competition for slim-type DVD burners, Quanta Storage has decided to make non-operating investment of US$285,000 to set up a subsidiary to make GPS receivers and key components in Changshu, eastern China, the sources noted.