Leading Japanese manufacturers of 16x DVD+R/-R discs began to expand their production capacities in the third quarter of this year, which has Taiwan makers guessing about their motives.

The Japanese makers, including TDK, Taiyo Yuden and Mitsubishi Chemical, each already have monthly capacities of four-six million discs. The companies had originally planned expanding capacity in 2003, but decided against it after seeing that Taiwan makers, which are more price competitive, had successively completed their own capacity expansion.

According to the Taiwan makers, Japanese makers are expanding capacity because they estimate that no more than four or five Taiwan competitors, fewer than they originally expected, have the technology to produce 16x DVD discs. In addition, the Japanese makers are also preparing to volume-produce single-sided double-layer DVD discs and next-generation blue-laser DVD discs, the Taiwan makers noted.

CMC Magnetics and Ritek, the top-two Taiwan makers, judged that the capacity expansion is to increase output for the Japanese makers? own-brand sales rather than for OEM orders since production costs in Japan are still higher than in Taiwan. CMC and Ritek argued that the capacity expansion will not lead to substantial competitive pressure on them.