News

posted on 27 May 2008 12:07

Hitachi president Kazuo Furukawa said Hitachi wants to surpass Seagate's profitability with its hard disk drive (HDD) business at a corporate strategy meeting on Monday.

Hitachi is losing money and the annual trend is for deepening losses. Plasma TVs and HDDs are two of the main reasons it is losing cash - 32.7 billion yen in fiscal 2006 and 58.1 billion yen in fiscal 2007. After thinking about spinning off the HDD unit or taking in outside investment through Silver Lake it decided to make the HDD unit profitable through its own efforts.

It sees three reasons for doing this. First, Furukawa said that Hitachi has the perpendicular recording technology and new head technology needed and these will enter mass production as soon as possible: "As a result we can be the winner. For sure we will be the winner."

There is synergy between Hitachi's computer storage business and the HDD business. Below the controller in Hitach Data Systems' arrays are lots of disk drives. Furukawa said  that HDD and SSD (solid state drive) technology relationships would have to be recognised by the controller.

Thirdly the storage business is global and suits Hitachi's corporate aims.

Furukawa said that concerning the profitability levels of Seagate and Western Digital: "We can attain that level for sure. As soon as possible we'd like to catch up with these two companies and surpass them."

Encouragingly, in the last two quarters Hitachi GST, Hitachi's HDD unit, has recorded profits. Furukawa said that Hitachi was accelerating structural reforms in HGST to achieve product cost-of-sales that rival any other competitor through:

- Improving yield and reducing scrap
- Reducing its costs faster than HDD price erosion
- Reducing component count through standardized designs
- Getting to market faster with high-value products and so increasing sales volume
- Consolidating manufacturing sites
- Improving its supply chain management
- Looking at how to reduce fixed costs.

Plant consolidation will see head gimbal manufacturing, currently taking place in China, Thailand and the Philippines, contract to a single plant in China. Slider manufacturing will be carried out in the Philippines with the Mexico plant being closed. Japanese media manufacturing will cease with USA and China plants making all the media required.

The company will focus on high-speed enterprise drives and large capacity desktop and mobile drives. It will also offer low-power drives to support green-keen customers. Hitachi GST's management team is being strengthened to help drive these efforts.

Furukawa said Hitachi has always viewed the status of its Hitachi GST unit to be that of a core Hitachi business.

^{[Paul Roberts, news editor.]}