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Appeared on: Friday, January 04, 2008
Hitachi to Focus on Bigger Hard Drives

Hitachi said it is phasing out its small hard disk drive business as competition heats up with flash memory chips, and that will focus resources on larger-sized 2.5- and 3.5-inch drives.

However, Hitachi will continue to offer 1.0- and 1.8-inch hard disk drives, which are mainly used in portable music players and other mobile devices, for its existing clients.

Large-sized hard disk drives used in PCs and servers hold a cost advantage over NAND flash chips, but profitability was hit hard in the market for 1.0- and 1.8-inch drives as storage capacity has increased and prices have come down for NAND chips.

Hitachi, which bought the hard drive unit from IBM for $2 billion in 2002, is in talks with U.S. private equity firm Silver Lake about the possibility of selling a stake in the division, sources familiar with the situation said in December.

Separately, another Japanese electronics maker, Fujitsu, said it has shelved its plan to launch 1.8-inch hard drives, underscoring the growing presence of NAND-type flash memory chips as the storage device of choice for portable electronics.

Fujitsu announced in January 2006 that it will jointly develop 1.8-inch drives with U.S.-based Cornice Inc for consumer electronics and aims to launch a 120-gigabyte model by April-September 2007.

But a Fujitsu spokesman said on Friday the plan is now on the shelf due to growing use of NAND flash chips.

Fujitsu currently makes 2.5- and 3.5-inch drives.


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