History 2002: ExcelStor to Manufacture IBM Desktop HDDs

Great Wall Technology’s subsidiary ExcelStor Technology will manufacture, out of China, the 40GB single-disk version of IBM’s Deskstar 7,200rpm 120GXP desktop drives.

The first units are expected to roll off the assembly line in 2H02.

Few additional details have been given by the 2 subcontractors, other than that the deal is for 3 years, and that both companies will resell units under their own brand names.

The plant will be located in the Shenzhen area of Southern China and is expected to generate more than 3,000 new jobs.

This won’t be the first HDD plant in China, and ExcelStor already manufactured low-cost low-end units with only 5.1 and 7.5GB per platter, following the acquisition of certain Conner Technology assets.

Great Wall and IBM have been working together since 1994 to assemble PCs, PCBs and MR HBAs.

Although rumors abound about IBM’s unprofitable HDD business, this agreement seems to quell speculation that a merger or acquisition is imminent. The deal looks good for both parties, even if the financial aspects of the agreement have not been revealed. It will allow Big Blue, which abandoned its 5,400rpm desktop HDDs, to rely on a manufacturing partner with low-cost processes for its low-end drives, those at 40GB, until now assembled in Hungary and Thailand, while at the same time providing an entree into the enormous Chinese market.

It’s equally good for ExcelStor, which until now was hindered by old technology, and will now be able to make up-to-date drives.

It’s not the first time that IBM has subcontracted the manufacturing of certain HDDs in Asia, if one recalls NEC in the Philippines.

This article is an abstract of news published on issue 171 on April 2002 from the former paper version of Computer Data Storage Newsletter.