With the rising market share of its partner Wadeh Electronics, a DVD player loader maker, ALi Corporation’s (formerly Acer Laboratories) shipments of its DVD player servo chips as well as its market presence in China have been increasing significantly, narrowing the gap between itself and rival Mediatek.

A DVD player loader consists of optical pick-up head (PUH) and servo chip. As most Chinese DVD player manufacturers lack the loader production technology, the loader suppliers play an important role in the China market, and servo chip companies usually team up with them to gain better access to the marketplace. At present, ALi has formed an alliance with Wadeh, and Mediatek cooperates with South Korea-based Digital Video Systems (DVS).

Sources from IC design houses said that previously the DVD OEM market in eastern China was dominated by the Mediatek/DVS alliance, but the picture has started to change when ALi and Wadeh stepped into the arena in 2001. With ALi’s help, Wadeh’s production technology has greatly improved and its market share in the Guangdong Province region has risen significantly to 60%. However, given their earlier entry into the market, Mediatek and DVS still control the Shanghai and part of the Guangdong Province areas.

In addition to technology improvement, Wadeh’s self-production model has also allowed the company to handle the pressure of price competition better than DVS, which purchases components from other manufacturers for its loader production.

Market analysts estimate that Wadeh’s DVD player loader shipments reached one million units in the first quarter and should be able to attain 1.5 million units in the second. This year, the company is expected to ship five million units, growing by over 100% from 2001.

Boosted by the growth, ALi’s servo chip shipments have been climbing closer to those of industry leader Mediatek. In the first quarter, Mediatek shipped 4.5 million servo chips and ALi around 2.5 million units.