Investor Relations | IR Events | Performance Briefing

[ 1st Half of fiscal 2008 Performance Briefing ]HDD Head Business Outlook

Mr. Atsuo Kobayashi<br>
General Manager<br>
Data Storage & Thin Film Technology Components Business Group

Mr. Atsuo Kobayashi
General Manager
Data Storage & Thin Film Technology Components Business Group

I'd like to report on our first-half results and projections for the second half and full year. Sales in the first half were ¥156.9 billion, compared with our forecast of ¥146.4 billion. For the second half, we are now forecasting sales of ¥159.0 billion, up from our earlier forecast of ¥152.6 billion. Our current full-year sales forecast is ¥315.9 billion, compared with our previous forecast of ¥299.0 billion. The first-half sales result represented a 2% year-on-year increase, while the forecasts for the second half and full year would equate to year-on-year increases of 5% and 4%, respectively.

Next, I'd like to look at HDD head demand and TDK's market share. Previously, we projected total HDD demand of 500 million units. We are now projecting lower demand, specifically 494 million units. On the other hand, a projected increase in the average number of heads per HDD, from our earlier forecast of 2.8 to 3.0, due to an increase in high-capacity products, is expected to lift total HGA demand. In terms of our market share, we have raised our forecast from 31% to 33%, given the relatively strong performances of our customers.

Regarding the schedule for launching new products, we should begin mass production of the following products before the end of this year: 330GB/P heads for 3.5-inch HDDs, 160GB/P heads for 2.5-inch HDDs and 80GB/P heads for 1.8-inch HDDs. Furthermore, qualification is continuing for 500GB/P heads for 3.5-inch HDDs, 250GB/P heads for 2.5-inch HDDs and 120GB/P heads for 1.8-inch HDDs.

Today, I'd also like to comment on two recent acquisitions related to our HDD head business.

The first concerns the acquisition of assets of a HDD head-related business from Alps Electric Co., Ltd. Alps conducts the back-end process in Japan and thus possesses wide-ranging expertise in manufacturing technologies that it has built up in the country. The recent acquisition covered not only equipment but also intellectual property and we believe we can make full use of this in our HDD head operations. Furthermore, regarding back-end facilities, we believe that it was more advantageous to acquire facilities in this way than to invest in new facilities as we expand production. Moreover, by utilizing Alps' expertise we believe we can boost productivity on existing production lines by increasing yields and cutting materials and consumables costs. In regards to assembly, Alps' lines are configured based on a different concept than TDK's. Because of this, considering the recent rise in labor costs at our operations in China, which had been advantageous in terms of production costs, we believe that we can apply this difference in technology effectively.

The second acquisition was of a company that manufactures suspension assemblies. Suspension assemblies are a key component of HDD magnetic heads, but head manufacturers have faced a major problem in not being able to reduce procurement costs of these components. They have found it hard reducing waste and fully using suspension assemblies. Suspension assembly manufacturers, for their part, seem to have struggled to match their production capacity with demand for suspension assemblies for some time. By joining forces with Magnecomp Precision Technology Public Company Limited (MPT), TDK believes that these issues can be surmounted. Further, we believe that the expected increased output of heads by MPT's major customers and TDK will fully utilize MPT's production capacity and help expand its suspension assemblies business. We are thus confident that the suspension assemblies business will become a new pillar of our HDD-related business at TDK.

Thank you for your attention.

Recommendations

  •  
  •  
  •