History (1997): Singapore Technologies Drops Micropolis

“The board of directors of Micropolis (S) Ltd. has decided today to wind up the company. This decision was made after a thorough and comprehensive review of the company’s financial position and market condition.“

Thus starts the first sentence of a press release signed by Dr. Joe Chen, president and CEO.

There are 4 possible reasons for this liquidation: 1) Micropolis addressed a market for high-end HDDs that was flat this year, 2) the number of competitors has increased even as the market shrunk, 3) the firm’s technology was not leading-edge, and 4) the mother company, Singapore Technologies, no longer wanted to pour money into a losing venture.

Chen further stipulated: “When we entered the market in early 1996, there were only 4 players, including ourselves, in the high-end disk drive market. Today, there are at least 7, some of whom are very aggressive. This has led to excess capacity and severe price erosion for the industry. It no longer makes any commercial sense for us to continue.”

Micropolis’ revenue for the first 3 quarters of 1997 totaled $140 million, far below the monthly target of $45 million

The entire workforce was laid off and asked to leave the premises within hours. Total staff was 1,300 in Singapore (HDD assembly plant), 700 in Thailand (HSAs plant), 300 in USA (R&D and marketing), plus marketing and sales staff in Europe. The entire workforce, that is, with the exception of Chen himself, who, according to Business Times, is expected to remain with the Singapore Technologies group.

Chen is a student of Tom Mitchell, and thus not a man with a gentle way of doing business. In particular, he told in CDSN, August 1996, that it was he who convinced Singapore Technologies to acquire Micropolis. He emphasized the strong background finances of the government-owned group. But Chen is also a prodigious worker: “Work is my hobby,” he said at the time.

What will become of what was once one of the great manufacturers in the history of HDD drives? The personnel, highly qualified, should not have too much trouble finding new work. Still according to Business Times, Coopers and Lybrand were named liquidators and the firm’s assets are likely to be put up for sale. According to the Los Angeles Daily News, rumors have circulated in Chatsworth, CA, that Micropolis will be bought by Seagate. We learned from our own sources that the business was offered to Maxtor, who turned it down.

The Asian press writes that the 19-month Singapore Technologies disk drive venture will have cost a total of $120 million, and that the final debt will exceed $45 million.

As always in such cases, customers, mainly components suppliers, are most likely to suffer, although not greatly, to the extent that the new Micropolis never became a big player in this market. Among the firm’s suppliers were Read Rite, StorMedia (who decided to set up shop in Micropolis’ Singapore-based factory), Uraco and MMI.

Micropolis in a few dates:
1976 Date of birth
1979 First Micropolis Winchester unit
1983 First 5.25-inch HDD drive 1988 Launching of a 3.5-inch line, discontinued in 1989
1991 Raidion announced, one of the first low-cost RAID-5
1992 A record yearly revenue of $397 million, the compaqy will never do better
1995 Comeback in 3.5-inch HDDs with 4.3GB Taurus and 9GB Capricorn using MR heads, but then the company focused on 5.25-inch high performance technology
1995 Subsystem business (Raidion, AV servers) organized under a new subsidiary
1996 On March 29, Singapore Technologies buys the disk drive assets of Micropolis for an estimated amount of $47 million, the subsystem business is renamed StreamLogic (recently under Chapter XI)
1997 First to announce a 20GB+ 3.5-inch HDD drive. On November 10, Micropolis is “wound up”

This article is an abstract of news published on issue 119 on December 1997 from the former paper version of Computer Data Storage Newsletter.