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Tuesday, January 11, 2005
Taiwan DVD player makers: OEM orders shifting from China to Taiwan and S. Korea

Royal Philips Electronics has been focusing its attention on DVD makers in China, working to get all DVD players made in China, the largest regional producer of the product, banned in the European and US markets on royalty issues.

Philips has shifted all of its OEM orders to makers in Taiwan and South Korea, running many China makers out of business, said the makers.

Because almost all China-based makers of DVD players have not paid royalty fees for Philips patents, the Dutch company has asked customs agencies in the US and Europe to block all DVD players imported from China, the makers pointed out.

Philips? crackdown has had a negative effect on China?s production of DVD players, causing a large-scale shutdown of makers in China. The number of producers has fallen from a peak of 400-500 to below 100, with only a few capable of OEM production for international clients, the makers noted.

As a result, a large volume of OEM orders have been transferred from China to Taiwan and South Korea, although Taiwan makers? quotations of US$32-35 are higher than the US$26-28 quoted in China because Taiwan-based makers, such as Mustek Systems, Ya Hsin Industrial and Eastern Asia Technology, will set aside budgets for royalty payments to Philips.

As the OEM production costs in Taiwan and South Korea are higher than in China, the sale prices of DVD players on the global market are unlikely to drop any further, and in fact may rise somewhat, the makers expect.

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