Ritek and CMC Magnetics have once again lowered unit CD-R disc prices by 10-15% to stay competitive on the European market. Although the current buying rush is expected to keep the sector busy until the end of the year, smaller companies may not be able to stay afloat when demand comes down again. In the second quarter of 2001, renewed capacity expansion kept supply above demand, and CD-R discs fell to US$0.14 a unit. Ritek did go back up to US$0.22-0.24, but the recent increase in demand has given it an opportunity to claim a larger market share by offering lower prices than European competitors. Its average quoted price for November is between US$0.20 and US$0.22. CMC is now offering a CD-R disc for US$0.24-0.25, down from US$0.28. CMC said the company dropped the price as a way to clear out 24x speed CD-R discs and make room for 32x speed discs, which will be produced in greater volume starting in 2002. According to CMC, the price drop will not affect its gross margin, which should remain at 30%.

Price adjustments at the top are likely to make things harder for second and third-tier manufacturers. The quoted price for a CD-R disc, not including royalties, is already very close to the cost of production.