Smaller Disc Makers Suffer Shortages

Second-tier Taiwan-based CD-R and DVD+R/-R discs producers are facing short supplies of TFP (tetrafluoro-propanol), a dye solvent used in the manufacture of optical discs, and consequently some have reduced production while others have even stopped production temporarily, according to industry sources.

China Fluoro Technology and two other chemical manufacturers in China as well as Daikin Industries in Japan are major producers of TFP around the world, together accounting for more than 90% of the global production capacity, the sources indicated.

While Daikin focuses on the domestic market, the three China-based companies are the main TFP suppliers to optical disc makers in Taiwan, Hong Kong and Southeast Asia, the sources noted.

In preparation for the 2008 Beijing Olympic Games, the China government in April 2008 asked the three TFP makers and other chemical producers to cut or stop production for 100 days in an attempt to reduce air pollution, the sources pointed out.

In addition, the China government placed a temporary ban on the transportation of dangerous goods, including TFP for export, beginning June 2008, the sources indicated.

The situation has resulted in a short supply of TFP for second-tier disc makers, the sources pointed out.

CMC Magnetics and Ritek, the top-two Taiwan-based makers of blank optical discs, have not been substantially affected by the shortages because they have supplies guaranteed by long-term contracts, the sources indicated.

As the third quarter is traditionally a peak period for blank optical discs, the decreased production may push up OEM quotes for the quarter, the sources noted.

Story source: digitimes.com.