History (1995): Seagate Acquires 100% of Stock of Applied Magnetics’ Tape Head Subsidiary

Seagate Technology (Scotts Valley, CA) reached a definitive agreement last November to acquire 100% of the stock of Applied Magnetics Corporation’s tape head subsidiary for $21.5 million cash.

The Santa Maria, CA-based operation designs, manufactures and markets magnetic recording tape heads for the storage industry, including metal-core heads for half-inch tape drives and thin-film and MR heads for QIC devices.

“AMC’s tape head operation is complementary to Seagate’s existing audio tape head business and the company’s role as a significant supplier of disc heads to the OEM merchant market,” said Brendan Hegarty, SVP and CTO, components.

Lawney J. Falloon, president and GM of AMC’s subsidiary, has been named to the position of VP, tape head operations and will report to Hegarty.

Seagate entered the thin-film tape market in 1988, and is now the largest manufacturer of thin-film/ MR heads for the Philips’ Digital Compact Cassette audio devices. In 1993, the company initiated development of tape heads for QIC minicartridges.

Manufacturing of the current metal tape heads will be produced under a contract with AMC’s Korean operations. Wafers for the thin-film/MR tape heads will be manufactured at Seagate’s wafer fabrication sites in Normandale, MN, and Springtwon, Northern Ireland. Machining and assembly of the advanced tape heads will be done at Seagate recording head operations in Malaysia.

Seagate is equally present in the disk head market. Since beginning production in 1993, more than 250 million thin-film heads have come out of its factories. Annual production in 1993 was around 120 million.

It is easy to wonder, however, if the process through which the company is affronting IBM since 1991 will not prevent, or at least slow down Seagate’s vague impulses in MR heads for Winchester disk drives.

It seems that way, even though the contents of the November 15, 1994 settlement between the 2 firms, as well as Hergarty and Peter Bonyhard, are confidential. These last 2 are former IBM employees who Big Blue accused of leaking secrets on this MR technology to the benefit of Seagate. All that is known is that “they have entered a new patent cross licensing agreement.” It can be assumed that Seagate is now home free, but probably will have to pay royalties to IBM. It is worth noting that AMC is also engaged in MR and disk heads, but Seagate didn’t touch this activity.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 85, published on February 1995.