History 2001: ExcelStor, New Chinese HDD Manufacturer

In the HDD assembly industry, where the recent trend has tended more towards consolidation, it takes a certain gumption to venture into HDD production, even more to focus exclusively on desktop models.

This said: the case of new company ExcelStor Technology, based in Hong Kong, is somewhat exceptional.

It is in fact an enterprise founded on the ashes of Conner Technology, a concern launched by Finis Conner in 1998 and folded in 2000. Its business model centered on maximal cost reductions in order to offer the cheapest desktop drives available. To this end, the manufacturer subcontracted assembly to the Chinese conglomerate, Great Wall Technology based in Shenzhen, China, which even invested nearly $12 million in the operation, relying on its Kaifa subsidiaries for disks and substrates.

When the venture didn’t pan out, according to former executive Peter Knight, “[a] company related to the Great Wall Group (we are not sure how) was formed, called ExcelStor, and this company acquired part of our former building in Colorado [The R&D center in Longmont. -Ed.] and has hired some of our former employees there. It also uses the factory in PRC [Kaifa’s complex in Shenzhen. -Ed.] and part of the Hong Kong office. The sale occurred in 2000. Eddie Lui is running the operation. I believe they have been building drives for months, but I don’t know what or how many.”

In fact, the quasi-new operation is assembling 3.5-inch 5,400rpm desktop units with 10.2GB and 15GB on a single platter with 2 heads, in ATA 33/66 interface. The products sell exclusively in bundles of 640 drives, primarily destined, it would appear, for the Asian, and more specifically Chinese market, given that we’ve never seen a single of the low-cost devices, which are not based on the latest technology.

Who is Great Wall Technology Co. Ltd. (GWT)?
Founded in 1998, it is a subsidiary of the Great Wall group. Headquartered in Shenzhen, PRC, it numbers some 10,000 employees posted sales of roughly $7.7 billion in 2000. The group is a vertically-structured conglomerate that manufactures PCs for IBM, along with network equipment and components for HDDs, through 2 of its 5 direct subsidiaries, Shenzhen Kaifa Technology for disk heads and Shenzhen Kaifa Magnetics for HDD substrates, with such prestigious customers as Maxtor, Seagate and WD. GWT, through another subsidiary, China Great Wall Computer (CGWC), also owned 10% of Shenzhen Hailiang Storage (other shareholders are IBM at 80% and Kaifa at 10%), founded in December 1995, which manufacture magnetic heads for IBM’s HDDs with an annual production capacity of 30 million MR head gimbal assemblies.

It was this vertical integration that attracted Conner Technology, as well as Belfort Memory International, to subcontract HDD assembly to GWT.

In the end, however, both companies failed, and GWT now assembles HDDs sold by ExcelStor in China, with the help of Conner Technology, of course.

This article is an abstract of news published on issue 165 on October 2001 from the former paper version of Computer Data Storage Newsletter.