Contract prices of 40x CD-RW drives, now the mainstream rewritable CD drives, have fallen to US$50 and in some cases to US$46-48, highlighting price competition in the fast-saturating market.

The price cuts, at 10-15% compared to the first quarter, come as Samsung, Hitachi LG Data Storage and a host of Taiwanese companies have increased capacity output. Some companies are also planning to transition to 48x and even 52x drives.

The rise of 40x CD-RW drives, meanwhile, is accelerating sales of 24x and 32x products among drive distributors hoping to adopt the 40x products broadly in their portfolio. Retail prices for lower-speed CD-RW drives now fall by an average of 10-15% monthly, the distributors said.

Though most Taiwanese computer drive makers enjoyed comfortable gross margins in the first quarter – 31% at Lite-On IT, 20% at Benq and over 10% at other first-tier makers – the companies said margins may have dropped to single-digit levels in the April-June quarter, underscoring the need to consolidate and gain market share in the industry, they said.