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Western Digital formats hard disk drive factory as demand spins down

Malaysia plant faces axe in 2019 while biz powers up more flash drive assembly lines

Western Digital will close its hard disk drive factory in Petaling Jaya, near the Malaysian capital Kuala Lumpur, blaming lack of demand for the gear.

WD powered up its operations in Malaysia in 1973, initially making custom semiconductors. It transformed the assembly lines in 1994 to make hard drives, and employed some 13,000 people after that. A $1.2bn R&D facility was added in 2011.

WD subsidiary HGST Technologies Malaysia closed down a plant in Bayan Lepas, Penang, Malaysia, in 2016. The land on which the factory stood was put up for sale in February last year.

Wells Fargo senior analyst Aaron Rakers said the closure of the one-million sq ft Petaling Jaya factory would leave WD with two disk drive manufacturing plants, both in Thailand: Bang Pa-In (1.7m sq ft) and Prachinburi (730k sq ft). WD has hard drive substrate manufacturing sites at Johor and Kuching in Malaysia, and also solid-state drive assembly and test facilities, media manufacturing lines, and R&D offices in Penang.

A WD spokesperson told The Register on Monday the HDD assembly site will be axed by the end of next year, and ramp up flash drive manufacturing:

In response to declining long-term demand for client HDDs, Western Digital has taken steps to rationalize its HDD manufacturing operations globally. The company will decommission its HDD manufacturing facility in Petaling Jaya, Selangor, by the end of calendar 2019. This transition will be executed in close collaboration with employees, customers, supply partners and other critical stakeholders.

The data technology industry is undergoing substantial change. This market transformation is driving increased adoption of SSDs and NAND flash in traditional HDD applications. The change has contributed to growth in SSD/NAND flash and declining long-term demand for client HDDs. Consequently, Western Digital plans to expand SSD manufacturing in Penang. The company is in the final stages of commissioning its second SSD facility in Penang, which will go into production in the coming months.

Thanks to its flash fab joint-venture with Toshiba, WD has a broad line of solid-state drives, and can sell them instead of hard disk drives in markets suffering HDD shipment erosion.

"Impacted employees will receive assistance, including severance compensation and upskilling support," a WD spokesperson told us. "Western Digital will retain a Center of Excellence in Selangor. This center will have several key engineering teams, core operational planning and regional support functions. They will relocate to new offices within Selangor.

"Western Digital remains firmly committed to Malaysia. The company values and appreciates its 45-year history of partnership with the Malaysian government and looks forward to many more years of shared prosperity and success.” ®

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