Hitachi eyes Shenzhen 'megahub'

PUBLISHED : Tuesday, 03 April, 2007, 12:00am
UPDATED : Tuesday, 03 April, 2007, 12:00am

Disk drive unit to merge media and HGA production in the mainland

Hitachi Global Storage Technologies, a unit of Japanese electronics conglomerate Hitachi, will consolidate production of media and head-gimbal assemblies (HGA) - the key components in making hard disk drives - in the mainland.

The company, the world market share leader in hard disk drives used in notebook personal computers, has chosen to centralise that development as part of plans to turn its Shenzhen operation into a 'mega-manufacturing centre'.

'As the primary manufacturer of media and HGAs for Hitachi, Shenzhen will develop a level of technology specialisation that will result in highly valued skill sets for the local workforce and our customers,' said Dirk Thomas, president for Greater China at Hitachi GST.

The Shenzhen operation already makes media, HGA and completed hard disk drive products. Two of the three plants in Shenzhen will add production of media for enterprise hard drives and HGAs for 2.5-inch car hard disk drives.

Mr Thomas says the output from the Shenzhen operation consistently doubles each year. Media production, for example, is expected to hit more than 80 million disks this year from about 40 million last year.

The increased manufacturing programme for Shenzhen is also part of Hitachi GST's sweeping revamp of its international manufacturing supply chain, which will see the closure of plants in Mexico and Japan.

Hitachi GST is expected to cut 11 per cent of its 40,000 staff worldwide, which would help the company realise about US$300 million in savings over the next five years.

Investment so far to build up Hitachi GST's complex inside the Futian Free Trade Zone in Shenzhen has crossed the US$200 million mark. The firm had earlier committed investment worth US$500 million to the project.

The firm's mega-manufacturing strategy is based on the premise that greater efficiencies can be gained by placing the whole manufacturing supply chain - from component making to suppliers, final assembly and shipping - close together.

This potentially shortens cycle times and minimises shipping costs - both of which can greatly affect Hitachi GST's ability to deliver products in time and at the right volume.

The strategy is also designed to advance the efficiency of Hitachi GST's customers, whose plants are also mainly based in Asia.

Researcher International Data Corp said the market for hard disk drives in the Asia-Pacific, excluding Japan, would surpass 270 million units this year, up 26 per cent year on year. Desktop personal computers were expected to take up 40 per cent of hard disk drives shipped to the region, followed by notebooks at 29 per cent. The growth of hard disk drive usage in consumer electronics would continue to be fuelled by the requirements of drive-based digital video recorders and set-top boxes.

In geographical terms, Hong Kong and the mainland will continue to absorb most hard disk drives shipped to the region this year. They mostly go to original equipment manufacturers and original design manufacturers in the mainland and Taiwan, where most of the world's computers and consumer electronics are assembled and built, according to IDC.