MPEG2 DVD-recorder chip prices to fall

Prices for integrated MPEG-2 chips used in DVD recorders are expected to drop from about US$40 currently to below US$30 in the second half of 2004, as a result of intensified competition and greater pressure from clients to lower costs, sources at international chip suppliers said. The integrated MPEG-2 solution for DVD recorders combines the functions of a decoder and encoder. While international companies dominate the market, major Taiwanese optical storage IC design firms, including MediaTek and ALi, are expected to join the competition in the second half of 2004, sources said. The international companies, including ESS Technology, Royal Philips Electronics, LSI Logic and Cirrus Logic, are selling MPEG-2 and servo IC chipsets at about US$40-45, but expect the prices to drop to about US$35 in the first half of next year and to around US$30 in the second half, sources said.