History 2000: TDK Buys Rival Headway in Disk Heads for $122 Million

Giant Japanese disk head maker TDK has bought rival Headway Technologies for $122 million through its Hong-Kong based subsidiary SAE Magnetics.

Headway was founded in 1994 as a venture between Asahi, Hewlett-Packard and Komag, and HP was its sole customer until 1996, when the PC manufacturer decided to get out of the HDD industry.

Even so, the company was never a leader in the disk head market, in terms of volume. Needing capital for future development and in order to pay off its debt to Western Digital, Maxtor and Komag, the firm attempted an IPO last September 1999, hoping to raise $35 million. Attempted and failed.

With the transaction, TDK acquires a wafer fab in Milpitas, CA, where Headway’s HQs were located, with roughly 600 employees.

The DSMR wafer technology was licensed to Seagate. As for IBM, it holds a license on all Headway patents until 2002.

Virtually all of Headway’s sales were directed at Seagate and Toshiba. SAE was Headway’s main subcontractor for HSA and HGA manufacturing in China, but also works for rivals Alps and IBM.

This article is an abstract of news published on issue 147 on April 2000 from the former paper version of Computer Data Storage Newsletter.