Hitachi to shift hard-disk media manufacturing to China

Hitachi Global Storage Technologies (GST) is planning to shift most of its hard-disk media manufacturing from plants in the US and Japan to China within the next three years.

The company, which was formed at the beginning of this year when Hitachi bought IBM'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 was because it was geographically closer to its South-East Asian assembly plants where the media was combined with other components to make a hard disk drive. Those assembly plants were in Singapore, the Philippines and Thailand.

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

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

The San Jose and Odawara plants won't shut completely, according to the plan.

The San Jose plant would remain in operation for development and pilot production of leading edge media while the Odawara plant would continue to work on innovative drive technology, such as perpendicular recording, Hitachi GST said.

The company employs about 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," Suzuki said.