Hitachi begins hard-disk production at new China plant

IDG News Service - Hitachi Global Storage Technologies Inc. (HGST) has begun production of 3.5-in. desktop hard-disk drives at a new factory in Shenzhen, China, a company executive said Thursday.

"Three years ago, we made a strategic decision to put manufacturing capacity in China and develop the market," said Dirk Thomas, president of HGST's Greater China operations, in a telephone interview. Hitachi opted to put the factory in Shenzhen, just across the border from Hong Kong, because the area has an excellent transportation infrastructure and is close to many customers and suppliers, he said.

After three years of preparation, the first 160GB Deskstar hard drives came out of the factory in January, giving a welcome boost to the company's desktop hard-drive production capacity, Thomas said. "We see desktop [hard drives] as an incremental expansion opportunity for HGST, and this [product area] is where we needed the capacity," he said.

The opening of the Shenzhen factory will not affect production at HGST's other manufacturing sites, Thomas said.

Hitachi has so far invested $100 million in the Shenzhen plant, which will eventually manufacture more than half of all the hard drives produced by the company, Thomas said. In total, Hitachi plans to eventually invest a total of $500 million in the plant complex, he said.

While Hitachi is currently producing desktop hard drives at the Shenzhen factory, the line can be easily switched to production of other models, such as mobile drives, Thomas said. While that option exists, Hitachi has no plans to make such a change in the near future, he said.

"In the next 12 to 18 months, our focus is to get as much of the desktop capacity that HGST has into China," Thomas said, adding the company wants to build up its network of suppliers for desktop hard-drive components around the Shenzhen facility. Currently, up to 85% of the materials needed to manufacture desktop hard drives are available within a 60-kilometer radius of the Shenzhen factory, Thomas said. "We're asking the rest of them to move there," he said.

The company currently employs 1,000 workers at the Shenzhen plant, and Thomas sees that expanding to 7,000 within the next "couple of years." Further down the road, the factory could employ up to 14,000 workers, he said.