History (1995): Hyundai Wants to Be $5 Billion Force in HDDs

Two Korean firms have aimed their sights high in the area of HDDs: Samsung, who hoped but failed to purchase Conner Peripherals and Hyundai Electronics.

Hyundai succeeded in acquiring 37% of Maxtor in 1994 and will soon take ownership of all of Maxtor’s manufacturing facilities in Singapore, Hong Kong and Thaila, for $100 million.

As a result, the San Jose, CA company will now concern itself solely with the design, marketing and sales of its drives. This is more or less the same route Quantum took with another Asian company, with the notable exception that the Japanese firm MKE is simply a subcontrator for Quantum, despite its enormous size, and that Quantum has gradually instituted its own manufacturing structure in order to rely less on its Japanese partner.

Nor have we heard the last word from Hyundai yet, in terms of its on ambitions. According to sources in Asia, the Korean conglomerate plans to invest $120 million to set up a new HDD assembly plant in Dailan, China. Its ultimate goal is to expand its production to $5 billion by 2000 and thus find a place among the 2 or 3 industry leaders.

Will the Koreans succeed where the Japanese failed? Perhaps, since the former have understood that it is impossible to compete with Californian and Coloradan firms in terms of R&D, and that it is better to simply buy up them, no matter the price.

Samsung will most likely not succeed with its current internal resources unless it acquires, as Hyundai did, a US company specializing in HDDs.

The Koreans have the determination and financial means to succeed – witness their achievements with car manufacturing.

But it remains to be proven that the Korean firms are capable of managing their American acquisitions, with the quick response reflexes the industry demands at all levels of R&D, manufacturing, marketing and sales.

By pulling the rug out from under Samsung’s feet with their purchase of Conner Peripherals, Seagate has, for the moment, checked the Korean threat. It is just as unlikely that Quantum or Western Digital will come under Asian control.

What is left for Samsung, apart from Micropolis, which despite its HDD manufacturing arm is orienting itself more and more towards storage subsystems?

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue ≠93, published on October 1995.