Plextor Denies Plan to Cease Optical Drive Production

by Anton Shilov
01/23/2007 | 11:32 PM

Plextor LLC, a leading supplier of optical disk drives (ODDs) that belongs to Japanese electronics giant Shinano Kenshi, said on Tuesday that it would not exit the market of optical disk drives, despite of announcement by its parent company. The firm, however, did not say whether it will continue to manufacture its drives on its own, or would outsource production to third parties.

As reported, Shinano Kenshi is planning a serious reorganization of its domestic business, including layoffs. As a part of the reorganization, the production of optical disk drives (ODDs) will be reduced to “10% of the peak production levels” and the company will concentrate its business on industrial equipment and the Plextalk digital sound recording playback equipment for blind, according to reports, which spurred widespread belief that Plextor will also exit the market of ODDs. However, according to a statement released by the company, the firm will stay in the business.

“This announcement by Shinano Kenshi will have no material affect on the operations of Plextor LLC, as we already completed a corporate reorganization in North and South America last year. Our business will continue as usual,” said Toru Nakazawa, president of Plextor LLC, USA.

The statement also reads that with its reorganization Shinano Kenshi wanted to “streamline” Plextor’s optical drive business to “enhance operating efficiencies”. The announcement does not clarify how the reduction of manufacturing capacities can enhance operating efficiencies in the particular case.

Due to generally high production costs in Japan, since the year 2005 producers of ODDs, such as Sony and Teac started to outsource manufacturing to third parties in South Korea and Taiwan. Foxconn Electronics has received orders from Matsushita (Panasonic) for models targeting the retail market, while Asustek Computer has started making DVD burners for Pioneer, which now only keeps in-house production for high-end models, an article over DigiTimes web-site claims. In fact, ODD business is so highly competitive that Nec and Sony have formed Sony-Nec Optiarc joint-venture to develop, design and manufacture of optical drives, whereas LG Electronics and Hitachi also have similar joint-venture.

“It is unfortunate that an incorrect translation of a Japanese article, which contained some errors, has led to the rumor that Plextor is somehow quitting the optical disc drive business. This is completely false. In fact, Plextor plans to continue to lead the market with innovative, exciting products that solve real world problems for our consumer and business customers. We deeply appreciate the loyalty of our customers and valued business partners. And we look forward to many years of future success,” Mr. Nakazawa concluded.