Alps to sell HDD head assets to TDK

Alps Electric Co. Ltd. will back out of the hard disk drive (HDD) head business with the sale of its magnetic device division's assets and related intellectual property to rival TDK Corp.

The two companies announced last week (March 15) that they have signed a memorandum of understanding on the transfer of Alps' business to TDK. They plan to complete the deal within the next fiscal year ending March 2008.

In addition to TDK, Alps was a major global supplier of disk heads. But Seagate Technology LLC's acquisition of Maxtor Corp. last May was a big blow to Alps. At that time, Alps counted Maxtor as a major customer. But when Seagate switched to its own internally manufactured heads in preference to Maxtor's, Alps lost about $255 million in sales.

Alps expects that revenue in its magnetic device division will drop by 35 percent to about $436 million in the fiscal year ending this month. The business is expected to see red ink by the second half of this fiscal year.

Alps and TDK plan to nail down the details of the transfer within a year. The company intends to switch the staff and buildings once devoted to the magnetic head business to other businesses such as sensors, thus avoiding layoffs.

- Yoshiko Hara
EE Times