English Top>News Releases>2003>SDK to Form Alliance with Trace in 80GB Hard Disk Business

News Releases

SDK to Form Alliance with Trace in 80GB Hard Disk Business

July 24, 2003

Showa Denko K.K. (SDK) has reached an agreement with Trace Storage Technology Corp. of Taiwan, R. O. C. (Trace) to form an alliance in the 80 gigabyte hard disk business. Under this agreement, SDK will provide its proprietary technology to Trace to manufacture 3.5-inch, 80GB aluminum-substrate hard disk media. Further, under a separate agreement, SDK will be entitled to purchase hard disks manufactured by Trace using the said technology on a preferential basis.

World demand for hard disk drives (HDDs) is expanding due to such new applications as car navigation systems, audio-video equipment and DVD recorders in addition to the traditional PC application. HDD production, which exceeded 200 million units in 2002, is expected to increase around 5% in 2003 helped by the steady increase in demand for the new applications.

SDK is receiving a lot of orders from HDD manufacturers because SDK is the only independent vendor in the world that can provide both aluminum- and glass-substrate hard disks in commercial quantities.

To meet growing demand for aluminum-substrate hard disks for desktop PC applications, Showa Denko HD Singapore Pte. Ltd. (SHDS), SDK’s subsidiary in Singapore, is expanding its production capacity by one million disks a month. The new production line will start up in the autumn of this year. However, SDK needs more capacity because demand for its glass-substrate hard disks is also increasing.

SDK is producing hard disks in Ichihara, Japan, as well. Furthermore, SDK produces aluminum substrates for hard disks in Malaysia and Oyama, Japan. After the expansion in Singapore, SDK’s total hard disk media production capacity as of December 2003 will amount to 6.3 million disks a month (3.2 million in Ichihara and 3.1 million in Singapore). On top of this, the alliance with Trace will enable SDK to increase its supply capacity by up to 2 million disks a month.

Trace - a member of the Koo Group - is an integrated hard disk manufacturer led by CEO Mr. Chao-Chin Tung. Its plant in Hsinchu, Taiwan, has the capacity to produce 2 million hard disks a month. The company also has two aluminum substrate producing plants, one each in Hsinchu and Johore Bahru in Malaysia. Following the alliance with SDK, Trace will be able to improve its product quality on time to market based on SDK’s advanced technology and fully utilize its capacity. Founded in 1990, Trace is capitalized at US$52 million and headquartered at 8 Technology Fifth Road, Science-Based Industrial Park, Hsinchu.

SDK will start purchasing hard disks from Trace in commercial quantities in the first half of 2004 after obtaining customer qualification. Thus, SDK’s financial results for 2003 will not be influenced by this arrangement. In 2004, SDK’s net sales will increase approximately ¥5 billion due to the contract with Trace.