Japan-based Memory-Tech will increase investment in China-based Shanghai United Optical Disc to produce pre-recorded HD DVD discs specifically for the China market, while Taiwanese pre-recorded discs makers will watch the situation and evaluate the feasibility of investing in Chinese mainland.

Memory-Tech will provide manufacturing equipment and technology to Shanghai United Optical Disc to begin production of pre-recorded HD DVD discs with an initial annual capacity of about two million discs in 2007, the sources indicated. The pre-recorded HD DVD discs will be of China-specific versions and distributed by two local sales agents.

Memory-Tech's investment was motivated by the expectation that the Beijing 2008 Olympic Games will bring about a fast increase in demand for optical discs with pre-recorded high-definition content.