Hitachi to shift hard-disk media manufacturing to China

Hitachi Global Storage Technologies Inc. (GST) is planning to shift most of its hard-disk media manufacturing from plants in the U.S. and Japan to China within the next three years, it said Wednesday.

The company, which was formed at the beginning of this year when Hitachi Ltd. bought IBM Corp.’s storage operations, currently operates media production plants in San Jose, California, and Odawara, west of Tokyo. The media is the part of the hard disk drive on which data is written.

Hitachi GST said part of the reason for shifting operations to China is because it is geographically closer to its Southeast Asian assembly plants where the media is combined with other components to make a hard disk drive. Those assembly plants are in Singapore, the Philippines and Thailand.

The other part of the reason for the shift is that it is cheaper to produce disk media in China than at its current plants, said Kenji Suzuki, a spokesman for the company in Odawara.

The three-year timetable announced today calls for the U.S. and Japan plants to remain as Hitachi GST’s primary media production facilities until the end of 2005. Initial media production is expected to begin in Shenzhen in the fourth quarter of 2004 and the factory is expected to be in full operation in the first half of 2006.

The San Jose and Odawara plants won’t be shut completely, according to the plan. They San Jose plant will remain in operation for development and pilot production of leading edge media while the Odawara plant will continue to work on innovative drive technology, such as perpendicular recording, said Hitachi GST.

The company employs around 800 people worldwide and would not comment on the possibility or size of potential layoffs at the San Jose and Odawara operations. “The hard disk drive industry is moving very fast so we cannot predict how many people we will need in 2006,” said Suzuki.