History (1992): Completely Reorganized Disk Head Market

HDD manufacturers have different strategies: IBM (Armonk, NY) or Seagate Technology (Scotts Valley, CA) believe in vertical integration, which means they rather manufacture most of the basic parts of their drives (heads, platters, motors, cards, etc) to not have to rely on suppliers. Conner Peripherals (San Jose, CA) and most other manufacturers generally use subcontractors for their components.

In the segment of magnetic heads, an essential part of HDDs since its performances rely on them, there recently has been plenty of movement in the US companies, the leaders in front of the Japanese that are becoming stronger and stronger.

Read-Rite (Milpitas, CA), number one in this segment with 39% of the market and a major supplier for Conner, acquired successively from drive manufacturers 2 Malaysian headstack assembly plants, both in Penang, Conner’s in exchange of shares, and afterwards the 1,100-employee one of Maxtor (San Jose, CA) who was looking for cash to keep on its activities. Read-Rite signed an agreement with Maxtor to supply these subsystems to the HDD manufacturer for at least 3 years.

On another side, Komag (Milpitas, CA), who supplies about one-quarter of all the magnetic rigid disks worldwide and that recently joined the Japanese company Asahi Glass, has just acquired the third magnetic head manufacturer, Dastek (San Jose, CA) by buying 3 million shares, over $40 million worth, after purchasing Siemens’ (Munich, Germany) activity at the end of last year.

Komag reported $60 million sales in its quarter ending in September, improving 48% compared to the same quarter of 1990. The Californian manufacturer makes about one third of its sales with Conner.

68% of last year’s revenue came from 4 customers: Conner, Seagate, Maxtor and IBM.

The independent supplier builds about 1.6 million disks a month, about as many as Seagate who manufacture its own heads and also partially buys from Komag.

Finally, the last large magnetic head facility in Europe, a former entity in Palmela, Portugal, set up in 1969 by Control Data with afterwards Bull, Honeywell and NCR, later runned by Imprimis then Seagate was closed down definitively.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue ≠48, published on January 1992.