History (1999): Two Companies Manufacture 2.5-Inch HDDs in Thailand for IBM

This is a part III in a series of reports on Thailand’s HDD industry by Jean-Jacques Maleval.

There are basically 2 companies that manufacture 2.5-inch drives in Thailand for IBM, the undisputed leader in this market: Saha Union Corp. and IBM’s wholly-owned Storage Products Thailand (SPT).

The rest are produced by IBM’s plant in Szekesfehervar, Hungary, which also makes desktop 3.5-inch units. [IBM’s server HDDs are all manufactured in Singapore].

Saha Union, one of the top ten Thai companies, is a manufacturing sub-contrator for IBM, which has invested nearly $280 million in the fab. This conglomerate was just as comfortable manufacturing textiles and shoes, before turning to HGAs and HDDs in 1991, in its Sriracha, Cholburi plant, 60 miles southeast of Bangkok. The plant employs 3,200 people who assembled nearly 7 million drives in 1998.

The old agreement with IBM expires soon, but is likely to be extended, since both companies seem satisfied by their collaboration.

Why, then, did Big Blue decide nevertheless to establish its own ultra-modern factory in 1996, called SPT?

“The land around Saha Union is 100% occupied, and there was no way to expand,” responded Norio Okumura, MD of SPT in Prachinburi. “We therefore preferred to invest in our own facility.”

From downtown Bangkok to Prachinburi, it takes 3 and a half hours to drive the 90-mile distance on crowded roads. In other words, Prachinburi is deep in the Thai countryside, where minimum wages are the lowest, $3.50 per day, compared to $4.40 in the capital, and where foreign companies benefit from the full financial advantages granted by the government (Zone 3).

Half of the employees are housed in dormitories next door to the factory, the others live in the vicinity, and are transported daily on a fleet of company buses.

It’s easy to understand why, among the 2,000 people that work at SPT, there are only 14 Japanese and 1 American, since there is little or nothing in the area to entertain them. Forget about spending an evening in Bangkok. Even for the weekend, it’s an enormous hassle.

Okumura, along with manager of engineering Masamitsu Horike, gave us a tour of the factory, which operates three 8-hour shifts, 6 days a week.

He pointed out an exceptional feature of the 6,000 square-meter cleanroom: it’s floor is at ground-level, while the ventilation is underground, which greatly facilitates the transfer of incoming components and outgoing HDDs on a single level.

A second cleanroom should be ready in July, for the manufacture of 3.5-inch units.

Upon completion of this second phase, SPT, IBM Hungary and Saha Union, which are in direct competition, will produce roughly the same number of HDDs each.

For the moment, SPT produces only 9.5mm to 12.5mm high 2.5-inch units – 2 million in 1998 – all with GMR heads, and will soon start with higher capacity 17mm drives as well as the new one-inch Microdrive.

The level of robotics seems low: “We use automation only for critical areas when human intervention creates technical problems,” said Okumura. “There will be slightly more automation for Microdrive assembly, but it won’t be total.”

After stopping by the servowriters for roughly 10mn, each drive is tested for 10 hours, with acoustic, humidity and even altitude testing (at the equivalent pressure of 2,000 meters), among others.

This article is an abstract of news published on issue 135 on April from the former paper version of Computer Data Storage Newsletter.