Keep in mind not only is
this a very low price and that C-Cube hasn't been
able to reduce cost on die/chips by that much
recently.
During this Q, Cube's CL484 was reduced from .5micro to .35 micro. roughly twice the yield from the same waffer. They also reduced how much they pay Tiawan Semiconductor for foundry. Even at these low ASPs, Cube will maintain gross VCD chip margins in the high 40s. Just look at Cube's last 10Q...........................
sec.gov
On top of that, even if VCD are a
hot item in China (which is true), the two
largest suppliers of VCD loaders have been
limiting their supply recently, thereby
creating a shortage on loaders. With a
shortage of loaders, you have mounds of chips
waiting around unused.
The CD loader problem was never an issue. It was first reported to be a problem in early Feb. 5.1M units were manufactured in Jan. through March. In April, a number of new CD loader manufacturers entered the market. Phillips and Sony also geared up production to meet the demand. Low demand in May and June, should mean that the supply channels are full again, and that prices for loaders are dropping.
China is a production based economy, not a consumer demand economy like western economies. There is no pile of chips sitting around. There is a pile of completed VCD units stacked in warehouses. In Feb., the Chinese government implimented a policy that would take subsidies away from manufacturers, who didn't meet their production goals. All OEMs kept building until retail was stacked full, just to meet their quotas. |
