News

posted on 17 April 2008 11:30

At a press conference Hitachi GST, the hard disk drive manufacturing division inside Japanese conglomerate Hitachi, said it would stand on its own two feet and not look for a partner; well, maybe it would in the future.

This confused message came after Hitachi GST had recorded its first quarterly profit in two years at the end of 2007. It made $85 million although the full year figure was a loss of $381 million.

Hitachi, the parent, had been talking with privare equity firm Silver Lake about a cash inhjection and/or partnership to bolster the unit which lags industry leaders Seagate and Western Digital, and has been generally loss-making since it was formed by acquiring IBM's disk drive division in 2003.

Recently a difference of opinion has been exposed between Hitachi's chairman and CEO over the matter with the chairman being in favour of HGST becoming profitable on its own.

Hitachi GST head, Hiroaki Nakanishi, said the company would look to reduce production costs more than it had already, and focus on increasing its market share in the enterprise hard drive area. Hitachi GST recently announced expanded distribution in China. He wants to increase sales of 2.5-inch drives and also those of 3.5-inch drives, signalling increased capital expenditure.

It seems necessary for Hitachi GST to increase its ability to bring new areal density levels to its drives, and that means it will have to accelerate the introduction of third-generation perpendicular recording technology. The company will also expose itself to price reductions to gain volume.

Coming as this has a day or so after Seagate cut its unit volume forecast for the next quarter the immediate expectation is that there will be price falls in both the 2.5-inch and 3.5-inch form factor areas with renewed pressures on profitability.

Both Hitachi GST and Hitachi spokespeople refused to rule out outside investment and/or partnering in the future, raising the question that it was not a wish to go it alone per se that finished the Silver Lake talks but a difference of opinion over the Hitachi GST unit's worth.

Hitachi GST announced a new hard drive today, a month after Seagate began shipping one with the same capacity and spin speed.

^{[Paul Roberts, news editor.]}