WD to Manufacture HDDs in Brazil

WD will begin hard drive manufacturing operations in Brazil, positioning the company to more effectively meet customer demand in this growing market and adding a key element to WD’s global supply chain infrastructure.

To maintain the highest levels of quality and lowest cost, WD will be partnering with local Brazilian electronics manufacturing leader Digitron to perform manufacturing operations and fulfillment services. Digitron’s high-volume notebook PC assembly and motherboard manufacturing plant in the Manaus Free Trade Zone is being utilized for WD’s products. This facility has existing infrastructure, a highly skilled workforce and a seasoned management team.

"The strategic decision to expand our global manufacturing operations into Brazil positions WD to more efficiently meet growing customer demand as we invest in the development of this key market," said Tim Leyden, WD’s chief operating officer. "Continued investments in large high-growth markets like Brazil, markets with developing infrastructures, strong underlying economics and an important customer base, will further solidify WD’s industry leadership. The new operations are part of a multi-year project to strengthen and diversify WD’s manufacturing base while increasing our footprint in one of the world’s most exciting markets."

The venture is expected to produce an estimated US$175 million worth of hard drives in its first year of operation and at least 50 new jobs in the region.

"We’re extremely proud to have been selected to be a part of WD’s manufacturing strategy in the country," said Sung Un Song, chief executive officer of Digitron. "This allows us to utilize our local knowledge and infrastructure with access to WD’s extensive hard drive manufacturing expertise to provide high-quality, competitive products to customers."

"The new operation will help WD streamline its supply chain to Brazilian OEM and distribution partners and greatly strengthen its ability to meet the explosive growth of storage demand in the country," commented Scott Davis, WD’s vice president of worldwide channel sales. "We expect significant improvements in turnaround time and service for our customers in Brazil. Initial customer shipments are planned by the end of October."

Comments

This decision by WD to produce HDDs in Brazil is not going to change the face of the industry.

But it's a first. All the existing assembly HDD manufacturing plants are based in Asia. The first ones (IBM, Seagate) were implanted in USA. Seagate was a pioneer in 1984 by building the first facility in Singapore, due to the action of Tom Mitchell. Year after year, all HDD makers also moved their production in Asia, actually in only six countries: China, Japan, Malaysia, Singapore, Thailand and The Philippines (see below). It's about the same for the HDD components (PCB, head, head gimbal and stack assembly, motors, platters, suspensions, etc.), the only exception probably being Springtown in Londonderry, Northern Ireland where Seagate produces disk heads on wafers exported in Asia.

Why? These activities are generally labor intensive and, as you know, the salary is lower in these countries (but Japan). Furthermore, it's less expansive to get components manufactured locally.

What's doing WD in South America where there never was any HDD plant to our knowledge? The minimum wage set is R$510 (US $310) per month in Brazil, to be compared with 6,000 bath (US $201) in Thailand. Of course, it's a better place to ship disk drives in South America but the worst one to get components to build HDDs. Following the arrival of US companies, there are more education on HDD technology in Singapore or Malaysia than in Brazil where there is nothing.

If you look at the figures published in this press release by WD, the Brazilian location will be a tiny facility corresponding to a small investment, with only 50 employees producing $175 million in HDD revenues, the equivalent of less than 4 million hard drives or 2% of the company's annual production and sales. And with the help of Brazilian motherboard's manufacturer Digitron that has already a manufacturing infrastructure.

Digitron's plant of 14,000 square meters
in Manaus, Brazil

HDD Manufacturing Plants in the World

ExcelStor: Shenzhen, China

Hitachi GST: Shenzhen, China; Prachinburi and Saha Union, Thailand; Singapore

Samsung: Gumi, South Korea; Donguan, China

Seagate: Suzhou and Suzhou, China; Korat, Thailand; Singapore

Toshiba: Binan Laguna and Calamba Laguna, Philippines; Navanakorn, Thailand; Shenzhen, China; Ome, Japan

WD: Bang-pa In and Navanakorn, Thailand; Kuala Lumpur, Malaysia