History (1994): IBM and Western Digital HDD Manufacturing Agreement Off

The love story between IBM and Western Digital encountered several hitches since the manufacturing agreement between the partners signed in September 93 didn’t last more than eight months.

No official press release from one or the other company was published on this breakup. IBM certainly doesn’t want it to get around and WD doesn’t want to hurt Big Blue who is one of its OEMs.

Theoretically, the agreement was scheduled for an initial 18 months but WD had made some restraints on prices and quantities to be shipped. The opening of a second plant in Asia, Malaysia, in addition to the one in Singapore, also probably made the English production less competitive.

WD was the biggest external customer of Havant that should have assembled 100,000 Caviar models per quarter. On the other side of a simple wall that separated the two plants, 180 IBM people were working closely with WD’s staff from Singapore. Among Caviar customers there was IBM’s own Greenock PC manufacturing plant.

Here are some reasons given officially by Jack Hockey, to explain the rupture with IBM: “Responding to strong market demand for disk drives as well as the deed to safeguard the employment staff engaged in other areas, Western Digital has decided to produce Caviar-branded drives in one facility in Malaysia, which until recently was used for testing and packaging semiconductors. As a result of this decision to utilize existing company assets, we will be phasing out our agreement with IBM Havant for production of Caviar drives in Europe.“

The pact with IBM was entered into before Western Digital moved out of the semiconductor manufacturing business.

“The circumstances have led to our decision to establish Caviar drive production in an existing WD facility in Malaysia to maintain employment in that location. The combination of favorable costs, tax abatement, proximity to our Singapore operation and an existing WD workforce makes Malaysia a very attractive supplement for us. Nonetheless, we have been most impressed by the facilities at Havant which met our aggressive start-up schedule and produces on-time deliveries within our quality targets. The 2 have a long-standing relationship and we would be happy to use Havant again in the future for disk file manufacture should our situation change. Production of drives in Malaysia is expected to begin in Autumn and will eventually result in an increasing of about 25% in the company’s total disk drive manufacturing capacity to meet strong demand for its market-leading products.”

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 76, published on May 1994.