After Fuh Yuan admitted recently that it has not received orders from Wal-Mart for two million HD DVD players at a target retail price of US$299, industry sources commented that it is unlikely that HD DVD players will fall to such a low price this year. The sources explained that global supply of HD DVD and Blu-ray Disc (BD) pick-up heads (PUHs) is still tight because yield rates on blue-laser laser diodes are quite low and the world's major suppliers of such PUHs, including Sony and Matsushita (Panasonic), have assigned their production capacities for own use first.
Since PUHs and chipsets together account for 60-70% of the production costs of HD DVD and BD players, the shortage of PUHs renders it almost impossible to minimize the production costs to below US$299 this year, the sources noted.
Other industry sources summed it up by saying any HD DVD player selling for US$299 this you would be priced below production costs.
Fuh Yuan Electronic Development found itself in a bit of hot water last month when its president, Hung-chi Teng, was cited in a Chinese-language Eastern Multimedia report as saying that the company had received orders from Wal-Mart for two million HD DVD players.
In response, Wal-Mart denied the claims and Fuh Yuan had to issue a press release on April 26 saying that Wal-Mart had only inquired about possible schedules and costs of producing such HD DVD players.
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