TDK, Fujitsu to ally on hard-disk drive heads

TDK and Fujitsu have agreed to work together on design, development and production of heads for hard-disk drives, they said Thursday.

Demand for hard-disk drives with a large capacity, suitable for use in products such as consumer digital video recorders, and with high reliability, for use in applications such as mission-critical servers, is behind plan, the companies said in a statement. Such drives require advances in head technology to enable more data to be stored or for them to be written and read more reliably.

Precise details of the alliance are yet to be worked out. However, the companies will work together on drive head designs. TDK is a major manufacturer of disk drive heads and has expertise in magnetic materials while Fujitsu has strengths in head evaluation technology and high-end server head technology, they said.

The alliance will affect the two companies' manufacturing operations in the Philippines, where Fujitsu owns hard-disk drive and drive head manufacturer Fujitsu Computer Products of the Philippines (FCPC), and TDK owns drive head maker TDK Philippines (TPC).

Under the preliminary plan the drive head operations of FCPC will be merged into TPC and the company will be converted into a joint venture. TDK will hold 66 percent of the new company and Fujitsu will hold the remaining 34 percent. The joint venture will be engaged in drive head production and its entire output will be supplied to FCPC, which will continue to manufacture hard-disk drives, said Scott Ikeda, a spokesman for Fujitsu in Tokyo.

Fujitsu expects between 1,500 and 1,600 workers will be transferred from FCPC to the new company, with no major layoffs at either company, Ikeda said.

A definitive agreement is expected in October this year, the companies said.

The announcement was made as both companies announced their financial results for the three-month period from April to June.

Fujitsu reported group net sales of ¥1.0 trillion (US$9.3 billion as of June 30, the last day of the period being reported) for the period, up 7.4 percent on the same period a year earlier, and a group net loss of ¥11.8 billion, which was an improvement on the ¥39.8 billion loss reported last year. The company credited significantly better sales of semiconductors, hard-disk drives and plasma display panels for the jump in sales. It also saw a sharp rebound in sales in its servers, mobile and IP (Internet Protocol) networks product categories in its platforms business.

TDK said net sales during the quarter were ¥157.9 billion, up 3.1 percent on the year, while net profit rose 26.6 percent to ¥10.2 billion. Sales of drive heads during the quarter declined due to fewer orders and the effect of a customer taking production in-house, it said.