Fujitsu to Stop Making HDD Heads, HDD Business Transfer Becomes Inevitable

From X-bit Labs: Fujitsu Limited on Wednesday said that it would discontinue its hard disk drive head business on March 31, 2009, as part of a broader strategic review of the HDD operations. Considering that virtually all makers of hard drives own HDD head manufacturing and there are few independent head makers, acquisition of Fujitsu’s hard drive business by another maker becomes almost inevitable.

The HDD head development and manufacturing operations are currently performed at the Nagano Plant. The company will reassign 36- plant employees working in the HDD head operations to other operations within the Fujitsu Group. The Nagano Plant also manufactures printed circuit boards for servers and telecommunications equipment, and will continue these operations after March 31.

In relation to the discontinuation of the HDD head business, Fujitsu plans to recognize a one-time, facilities-related loss of ¥5.0 billion ($56.104 million) in the consolidated financial statements for the third quarter of fiscal 2008 ended December 31, 2008.

Fujitsu has been working to sell of its money-losing hard disk drive business for several quarters now, but if early during negotiations the price of the HDD unit might not be competitive in the eyes of potential investors, currently there are issues with grim global economic outlook as well as high exchange rate of Japanese yen.

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