Western Digital Stops Shipping Platters to its Competitors

Storage specialist Western Digital announced that it will not ship its platters to competing companies as of May this year. The company is currently producing hard-disk drives platters through its Komag subsidiary, also known as WD Media.

"This action sizes our media and substrate operation to the current demands of a single customer - WD's hard drive business. It efficiently streamlines our media and substrate operations while enhancing focus on the development of future manufacturing technologies to support media and substrate requirements resulting from continued success in our hard drive business," said Don Blake, vice president and general manager of WD Media.

Western Digital is currently shipping virgin high-density HDD platters to a multitude of hard-disk drives manufacturers, including Hitachi Global Storage Technologies and Seagate Technologies. Western Digital's decision of terminating shipments is not likely to damage the two hard-disk manufacturers' storage businesses, as there are more suppliers of raw disk platters on the market. However, it should allow Western Digital to snatch additional market share by increasing the number of units the company will offer.

The hard-disk drive manufacturer also plans on consolidating its manufacturing facilities located in Penang, Malaysia. The Penang-based unit will only manufacture magnetic media, while the substrate plating and polishing operations will be moved from Penang to other two Malaysian facilities, namely Kuching and Johor Bahru.

The consolidation operations will likely affect the staff located in the company's headquarters. The storage specialist will lay off approximately 800 employees out of the 42,500 staff members (770 in Malaysia and approximately 30 in the United States).

Western Digital will spend about $16 million during the process, including termination benefits and asset impairment charges.

Recent market reports emerging from market analyst iSuppli claim that Western Digital's stock is currently close to a 10-year high, which means that the company has a market capitalization of about $6.5 billion.