Hitachi Tightens Hard Drive Belt

Hitachi Global Storage Technologies (HGST) today said it would close its
manufacturing plant in Mexico by mid 2008, a move that will eliminate 4,500
jobs, or 11 percent of the company’s workforce.

The hard disk drive (HDD) maker, facing stiff competition from rivals
Toshiba, Fujitsu and Seagate, as well as the ascendance of Flash memory, hopes
closing the Guadalajara plant and streamlining other operations will help
the company save $300 million over the next five years.

HGST, the HDD arm of Hitachi , will create so-called
competency centers that produce sliders, head-gimbal assemblies (HGA) and
media, three core components in the manufacturing of HDDs.

In HDDs, the head-gimbal assembly carries the slider, which in turn holds
the read/write head. The media is the disk upon which data is written.

HGST will move the slider manufacturing operations from the Mexico plant, to
Laguna, Philippines. Moreover, HGST will move its media manufacturing
operation in Odawara, Japan, to its Shenzhen, China, facility. Shenzhen will
also become the center of competency for HGA manufacturing.

Ultimately, Odawara will become the headquarters for slider development, while
HGST’s San Jose, Calif., plant will become the main center for media

HGST said in a statement that Odawara and San Jose, along with the company’s
HDD assembly plants in Thailand and China, will place the manufacturing
supply chain in a central hub to shorten cycle times and decrease shipping
costs, which have taken their toll on HGST’s business.

“Manufacturing and development consolidation is one of the top three
initiatives we are undertaking to achieve long-term business health and to
underscore Hitachi’s commitment to the hard drive business,” said Hiroaki
Nakanishi, CEO of HGST, in a statement.

HGST was forged in 2003 through a merger of
Hitachi’s and IBM’s hard disk drive businesses.

The company aimed to challenge Toshiba, Fujitsu, Seagate and others in the
market for making disk drives that store data for desktop computers, laptops
and consumer devices.

But the challenge has proven to be great; HGST registered an operating loss
of $371.3 million for 2006.

Part of this may be attributed to NAND Flash memory . While
relegated to smaller devices such as MP3 players , digital cameras and USB
drives, Flash is still gaining enough traction to put pressure on the HDD
makers that have powered consumer devices for so long.

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