The price of pick-up heads (PUHs) used in DVD-ROM drives has slipped to a historic low of US$8, dragging per-unit DVD-ROM drive contract prices to below US$40 amid slowing demand and increased output from Japanese PUH suppliers in the current quarter.
Prices of DVD-ROM PUHs are usually stable, as their supply is dominated by a few manufacturers, including Hitachi, Sony, Sanyo, Mitsumi and Philips. However, prices started to rise to around US$9 to US$10 per unit as Japanese firms cut back on production, leading to short supply in the fourth quarter of last year.
The recent retreat in PUH prices is attributed to the sector’s seasonal pattern and increased supply from Japan, according to DVD-ROM makers. New low-price PUHs launched by Hitachi could be another factor. Cutting costs by using a plastic lens instead of the more expensive glass lens, the company priced its products down to US$8, pressuring rivals to follow suit.
Contract prices of DVD-ROM drives, reflecting the lowered cost of PUHs, have dropped to US$38-$40 per unit.