09-19-2006

Hitachi Global's mainland investment passes US$200m
Shenzhen mega plant to make 50pc of firm's output of hard disk drives

Hitachi Global Storage Technologies, a unit of Japanese electronics giant Hitachi, confirmed the growing importance of China's hard disk drive market by crossing the US$200 million mark in building a global manufacturing facility in the Futian Free Trade Zone in Shenzhen.

The company has committed investments worth US$500 million to build the 200,000 square metre manufacturing complex, which will initially produce 3.5-inch hard disk drives.
Ultimately, it will produce 50 per cent of the firm's annual global output.

"We're doubling output every year," Dirk Thomas, president at Hitachi Global's Greater China operations, said in an interview. The US$200 million investment mark was passed earlier this year, he said.
Hitachi and other leading vendors are boosting production to keep up with demand from the mainland's fast-growing consumer electronics manufacturing sector, analysts said.
The diversity of consumer electronics made and used in China has contributed to growth in the mainland information technology market and stimulated demand for hard disk drives, according to research firm International Data Corp.
Market leader Seagate Technology, for example, is expected to spend US$1.3 billion in the year to June to bolster its operations and integrate former rival Maxtor, which it bought in May for about US$2 billion. Both companies have manufacturing plants in China.

Global hard disk drive shipments surged more than 24 per cent last year to about 381 million units. Revenue hit US$$27.9 billion, breaking the 1997 record of US$27.8 billion, according to IDC.
Demand for hard disk drives will continue to be strong this year, analysts said, with more going into consumer electronics.

By next year, 70 million units, or 20 per cent of all hard drives shipped annually, will be in consumer electronic devices, IDC said.

"Hard disk drives are everywhere and they are enabling a digital lifestyle that the world has never seen before," said Andrew Yang, country manager for Seagate in China.
Hitachi Global said that in the next five to seven years, up to 20 hard disk drives will be common in the typical internet-connected home. Applications include portable audio and video players, digital video cameras, set-top boxes and gaming consoles.

More than 50 China-based portable media player manufacturers, including leading brands Aigo, Enec, and TCL, already use Hitachi's one-inch and 1.8-inch drives designed by Hong Kong-based Digital Vision.
Hitachi has a long-term agreement with Shenzhen ExcelStor Technology, a subsidiary of Great Wall Technology, to make Hitachi Deskstar drives, and produce and market the drives under its own brand. ExcelStor is among the world's top seven makers of drives.

Mr Thomas also sees a big potential for hard disk drives produced in the mainland, the world's third-largest vehicles market, to be used in telematics, which integrates wireless communications, traffic-monitoring system, satellite-based location services and entertainment devices inside a vehicle.

The world's smallest (0.85 inch) and largest (500 gigabytes) hard disk drives started shipping last year.

"Over the next several years, the industry is poised to surpass the records set last year even in the midst of difficult technology transitions, further consolidation, and perplexing adoption patterns in consumer electronics markets," said John Rydning, research manager for hard disk drives and components at IDC.

Even so, makers face intensifying price competition in China and other markets.

Hitachi last week said it expected to record a 55 billion yen (HK$3.62 billion) loss for the year to March 31. It had previously expected to post a 55 billion yen profit for the year.
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First hard drive big in size, short on storage
The world's first hard drive was unveiled 50 years ago last week by International Business Machines, offering data capacity of five megabytes - about 1 per cent of the amount stored today in digital cameras.
The refrigerator-sized drive was called Ramac, for random access method of accounting and control, and weighed about one tonne. It stored data on 50 24-inch-diameter disks mounted on a rotating spindle, providing users the ability to access and process information.

IBM built more than 1,000 such systems (Not sure where this information came from) and leased each drive at about US$50,000 a year, the cost of which is equivalent to the price of 17 cars today.
The rudimentary technologies first employed by the Ramac would be dramatically refined over the two decades since its launch. Disk drives shrank and offered faster access times, helped by the advent of the personal computer market.
"It was advancements in hard-drive technology that make today's airline reservation systems possible, that allow ATM machines to function and digital video recorders to work," said Dirk Thomas, president for Greater China at Hitachi Global Storage Technologies.

"Hard drives remain the backbone technology behind everything from the internet to today's modern manufacturing systems… few, if any, inventions have had such a dramatic and pervasive impact on our day-to-day lives."
Hitachi, which acquired IBM's hard disk drive business for about US$2 billion in 2003, expects to bring to market in the first half next year a 3.5-inch drive with one terabyte of storage capacity.

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Media Monitoring:
Client: Hitachi GST
Date: September 19, 2006
Publication: South China Morning Post – Hong Kong
Circulation : 92,271

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