Hitachi is planning to axe its small hard disk drive business in order to focus on larger-sized 2.5- and 3.5-inch drives.
The move is in response to increasing competition from flash memory chips - NAND-type flash memory chips are rapidly capturing the market for storage devices for portable electronic devices.
Hitachi plans to continue offering 1.0- and 1.8-inch hard disk drives to existing customers. These are used mainly in portable music players and other mobile devices.
Large-sized hard disk drives, which are used in PCs, are more cost-effective than NAND flash chips, but the 1.0- and 1.8-inch drives have become less profitable as storage capacity has increased and the price of NAND chips has fallen.
Hitachi is in talks with US private equity firm Silver Lake about selling a stake in its hard drive division.