Lite-On IT reportedly lands DVD burner orders from Medion

Taipei, Aug. 4, 2005 (CENS)--Lite-On IT Corp. is reported to have landed an order for 600,000 DVD burners from European retailer Medion, which has long depended on Pioneer of Japan for the supply.

Taiwanese industry watchers expect the order shift to push NEC and Pioneer to contract Lite-On IT to make the products for them. Lite-On is currently Taiwan's largest supplier of optical-storage drivers.

According to market research firm Topology Research Institute of Taiwan, shipments of DVD burners will likely surge to 91.2 million systems worldwide this year from last year's 60.2 million systems while shipments of optical-disc drivers will moderately increase to 260 million systems from last year's 254 million systems.

Taiwan's industry watchers estimate Hitachi LG Data Storage is the only one of the world's top-four optical-disc driver suppliers to ship over one million machines a month. Toshiba Samsung Storage Technology, Lite-On and BenQ Corp. now ship 800,000 to one million burners a month. The four suppliers are competing for NEC's and Pioneer's contracts to shoot for more share of the market, which is estimated to have 90 million burners this year.

As a late entrant of the optical-disc driver industry, Samsung has adopted a price-cutting strategy. Nevertheless, the company has not affected its rivals but itself only. It shut production lines of floppy disc drivers last year after suffering a loss of US$85 million.

Some institutional investors estimate Lite-On to see shipments of DVD burners increase 50% throughout this year thanks to thriving demands for half-height DVD burners since last quarter. The company delivered nearly six million half-height DVD burners throughout last year. Among its major customers of DVD burners are Sony, Dell and HP.

The company reported after-tax earnings of NT$1.29 per share on revenue of NT$12.1 billion (US$393 million at US$1:NT$31) in the second quarter. By the end of this year, the company is estimated to have after-tax earnings of NT$5.44 per share, slipping an estimated 15% from last year, and gross margin of 17.6%.