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 shipped just 560,000 units of 1.8-inch drives in July-September, representing 2.3% of its total hard drive shipments, and 3,000 units of 1.0-inch drives during the same period.
Hitachi is in talks with US private equity firm Silver Lake about selling a stake in its hard drive division.