[ 3rd Quarter of fiscal 2006 Performance Briefing ]HDD Head Business Outlook

HDD Head Business Outlook

Mr. Takehiro Kamigama
Director
Executive Vice President
General Manager
Data Storage & Thin Film Technology Components Business Group

I'm Takehiro Kamigama, general manager in charge of TDK's head business. I would like to report briefly on this group's results.

Let me start with our sales and forecasts. Sales in the third quarter were ¥85.7 billion. For the fourth quarter, we are projecting sales of ¥77.7 billion, which would raise our forecast for the second half to ¥163.4 billion. At our previous earnings conference, we forecast ¥134.3 billion for the second half. Accordingly, for the full fiscal year, we are forecasting head sales of ¥303.7 billion compared with our previous forecast of ¥274.6 billion.

Next, I want to look at TDK's market share in HDD heads. Our forecast for fiscal 2006 is for a market share of 36%, unchanged from our previous forecast in October 2005. However, you will note that we slightly increased our projection for HDD demand and accordingly also raised our HGA demand forecast.

The final subject I would like to cover in my presentation is our schedule for introducing new HDD heads. The qualification of 160GB/P heads for 3.5-inch HDDs is a little behind schedule, but we expect to start mass production in April this year. These products are TMR reading heads that use longitudinal recording technology. This slide also shows the launch schedule for 200GB/P and 250GB/P products. We are currently working with customers to have these products qualified. We have just started shipping samples for qualification. These TMR heads use perpendicular recording technology. However, due to a media shortage, we don't expect to begin mass production until next year. There should be no technological issues with these products that will cause delays.

Regarding heads for 2.5-inch HDDs, mass production of 80GB/P heads is now expected to begin in April. With 100GB/P and 120GB/P heads, some customers use longitudinal recording technology while others use perpendicular recording technology. We believe that customers using perpendicular recording technology will probably use 100GB/P heads. There will probably be no significant difficulties in procuring 2.5-inch media, although the supply will be limited. Therefore, while we expect slight delays with 100GB/P products, we believe that we can begin mass production about the same time for both 100GB/P and 120GB/P heads. However, due to media supply problems, we don't expect to be able to ship large volumes.

That concludes my presentation. Thank you.