Thai Officials Woo Hitachi GST
Bangkok Post
August 29, 2006
Thai officials are lobbying Hitachi Global Storage Technologies (Hitachi GST) to choose the country for an investment that could be worth between US$750 million and $1 billion in hard disk drive (HDD) capacity expansion. Top executives of the Japanese company discussed their plans yesterday with two caretaker senior cabinet ministers _ Somkid Jatusripitak and Thanong Bidaya _ and the secretary-general of the Board of Investment, Satit Chanjavanakul. Hitachi GST has been holding its annual board meeting in Thailand. Dr Somkid said Hitachi was looking to invest up to $1 billion in new HDD projects in Asia, with China and Thailand seen as the main contenders.
Continuing political uncertainty in Thailand has led some major investors to delay expansion locally or shift to other countries. The US disk-drive maker Seagate, one of Thailand's largest employers, recently chose Malaysia for a $1-billion expansion programme. Dr Somkid said Hitachi was drafting an investment plan for Thailand and would specify what types of incentives and other conditions it would need.
Hiroaki Nakanishi, the chief executive of Hitachi GST, said the company was already committed to investing $100 million in Thailand next year to increase production capacity. ''Our utilisation rate in Thailand is nearly 100% already,'' he said. Nevertheless, the company has no clear plan to construct a new factory yet.
''If the market requires us to expand our production capacity, we will be prompt to do so because we still have three empty pieces of land surrounding our production facilities in Prachinburi province,'' said Mr Nakanishi. ''It would need more than $100 million to construct a new factory.'' He said Hitachi GST aimed to sell four million units of its new perpendicular magnetic recording (PMR) technology by the end of this year from the Thailand operation. Hitachi GST introduced the PMR technology, which greatly increases the storage capacity of hard disk drives, in May. It will start to ship its 2.5-inch, 160-Gigabyte PMR drives and 3.5-inch, 500 GB drives next month.
Mr Nakanishi said Thailand was the only production base for the PMR technology for the moment, with monthly capacity of one million units. ''We've obtained a good response from the market since PMR technology offers higher storage capacity to end users with similar prices, compared to our 2.5-inch Travelstar family,'' said Mr Nakanishi. The retail prices for 2.5-inch and 3.5- inch drives at Pantip Plaza are approximately 3,700 and 5,000 baht respectively. However, most of the drives are sold wholesale to computer makers at lower prices. Currently, 10% of Hitachi GST's Thailand operation is for PMR production. Mr Nakanishi said most consumers would switch to PMR drives over the next two years. In addition to Thailand, Hitachi GST also has manufacturing plants in China, Mexico, the Philippines, Japan, the United States and Singapore. It was considering setting up PMR production lines in the other six countries in the future, said Mr Nakanishi. In 2004, the company announced an investment of $200 million in Thailand with the aim to increase its annual production to 60 million drives by 2008. However, Hitachi GST's Thailand operation had absorbed the investment budget of more than $320 million from 2004 until now, said Mr Nakanishi.
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