Japan-based Taiyo Yuden announced last week plans to implement certain structural reforms in its optical media products business.
The company plans to downsize its optical disc production capacity by roughly 40%, as it seeks to restore profitability to the recordable media business it pioneered more than two decades ago.
Reflecting the growing use in recent years of innovations other than optical media products including such large-capacity recording devices as external HDDs and flash memories, the markets for existing optical media items including CD-Rs and DVD-Rs have rapidly contracted. In order to address these conditions, Taiyo Yuden has endeavored to reduce direct input costs, increase productivity and expand sales channels. At the same time, the company has worked to develop user-friendly
products. Despite these initiatives, the Taiyo Yuden Group's results continue to significantly suffer owing largely to the extremely harsh business environment.
Taiyo Yuden implemented measures in the fourth quarter of the previous fiscal year including cutbacks in
the inventories of such existing products as CD-Rs and DVD-Rs. This was due to intense competition from
overseas optical media products on the back of a greater than anticipated contraction in the market and
appreciation in the value of the yen, together with the sharp rise in raw material prices and other factors.
Taking these factors into consideration, an extremely difficult operating climate is forecast to continue into
the future particularly for existing products. In an attempt to counteract these conditions, the Taiyo Yuden
Group has recognized the need to quickly revitalize its optical media products business by implementing
certain structural reforms on the Company?s existing products.
Taiyo Yuden plans to streamline its production of optical media products to 65 million units per month, down from its current level of 110 million units per month. The company also says it will cut staffing its optical media business by 45%, and reduce its inventory levels by 40% by the end of its fiscal year (March 31, 2011).
The measures will put optical media products unit, which includes recordable CD, DVD and Blu-ray discs, on track to return to profitability by in the next fiscal year, Taiyo Yuden says.
According to China Economic News Service, Taiyo Yuden?s restructuring could be an outsourcing boon for Taiwan-based optical media producers such as Ritek and CMC Magnetics.