Blu-ray: Chinese companies challenge Taiwanese DVD manufacturers

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According to an equipment supplier, state-of-the-art factories in the Middle Kingdom intend to begin mass-producing the successor format to DVD in the first half of the current financial year, Asian industry portal DigiTimes reports, citing industry sources. In view of the Chinese advance, industry insiders now even believe that Taiwanese producers could fall behind in their Blu-ray investments.

Initial information suggests that one of the active Chinese companies is China Hualu Panasonic AVC Networks. Insiders believe the Chinese joint venture between state-owned China Hualu Group and Japan’s Matsushita Electric Industrial has a decisive competitive advantage with this aggressive tactic, which also benefits China as a production location. Although Taiwanese storage-media manufacturers such as CMC Magnetics and Ritek are already able to produce both write-once and rewritable Blu-ray discs, they have not yet switched to mass production, DigiTimes quotes an industry source as saying.

Taiwanese manufacturers of the DVD successor format, meanwhile, explain their conservative investment policy with concerns over potentially high fees. Their main concerns also remain that it is still unclear whether the Blu-ray market will actually grow over the next two to three years. “Singulus Technologies has already benefited enormously from the shift towards Blu-ray. I therefore firmly expect this medium to prevail in the long term. However, the fact that the Chinese are claiming a leading role is new to me,” an analyst source tells pressetext. CMC Magnetics President Robert Wong, by contrast, intends to cooperate with the Taiwanese government.

The aim of this cooperation is to establish an intellectual-property company responsible for Blu-ray that will represent the interests of the DVD successor format. Until such an institution exists, however, Taiwan intends to wait, according to the reports. Insiders also see the Taiwanese manufacturers’ restraint reflected in storage-media company Gigastorage’s market assessment. According to this assessment, demand for recordable Blu-ray discs is still so small that Japanese companies and Ritek have sufficient production capacity to meet current demand. Given this situation, it currently makes little sense for companies such as Gigastorage to push ahead with expanding production facilities for blank Blu-ray discs.