- With seasonal factors compounded by the impact from SARS, the second quarter shipment volume forecast for the Taiwanese optical disk drive industry has been revised from an 8% sequential drop to a fall of 10.3%, bringing total shipments down to 19 million units. Shipment value will also experience a 10.3% drop, amounting to US$709 million for the second quarter. However, as higher-priced slim and combo disk drives are accounting for a higher percentage of Taiwanese optical disk drive product mix, second quarter ASP will remain at US$ 35.7.

The Taiwanese optical disk drive industry's heavy dependence on the Chinese market is the chief instigator of the shipment value decline. Including built-in and add on drives, China accounts for roughly 50% of Taiwanese shipments. The rapid spread of SARS through southern and northern China since April has cleared PC store floors of shoppers, causing optical disk drive demand to taper off. PCs with built-in drives are expected to see a 16.7% sales decline in China, and add on drives are forecasted to witness a 30% drop.

The dual impact of SARS and seasonal factors is likely to realize sharp contrasts in the performance of individual players. Taiwanese makers that run branded businesses and ship a high share of output to China will feel much deeper reverberations from SARS. Taiwanese makers that engage on OEM/ODM businesses, send a lower proportion of shipments to China, and produce a higher share of slim and combo drives, will be much less affected.

In the third quarter, the Taiwanese optical disk drive industry is expected be able to bounce back from the valley of the second quarter. Assuming that late May and early June of 2003 see some containment of SARS in China, the drop in Chinese PC market sales is anticipated to trim down to 14.5%. As July marks the beginning of the traditional peak PC sales period, and because China has moved up the date of college entrance exams to June 6th, the peak period could begin even before July, yielding a brighter outlook for the third quarter of 2003.