After Asustek's contract for OEM production of optical disc drives (ODDs) for Pioneer expires in July, it seems likely they will either close or sell the business unit.

While Pioneer has been Asustek's largest OEM client of ODDs, the Japan-based vendor has been expanding its ODD production capacity at its two factories in Dongguan, southern China, the sources pointed out. In addition to half-height and slim-type ODDs, the two factories began to produce Blu-ray Disc (BD) Combo drives earlier this year, the sources indicated.

Pioneer High Fidelity Taiwan, Pioneer's Taiwan subsidiary, confirmed the expiration of the OEM contract in July and the expansion of the company's own ODD production capacity in southern China, adding that Pioneer will consider new OEM partners to maintain its production efficiency following the expiration of its contract with Asustek.

Asustek began to outsource production of DVD-ROM drives and DVD burners for sale under its own brand Asus in May-June 2007, leading to rumors that Asustek would end its OEM production of ODDs, the sources pointed out. As Asustek is inclined to focus on its core businesses such as motherboards and notebooks, the company is likely to close its ODD business unit or sell it, the sources noted.