Western Digital this week announced plans to shut down its HDD assembly facility (near Kuala Lumpur, Malaysia) by the end of 2019, and then sell the property. The factory has been used for several decades, but Western Digital says that the total available market for client hard drives has been shrinking in the recent years and will continue to do so in the coming years, which is why it does not need the extra manufacturing capacities that it will not be able to use.

Western Digital is a vertically integrated maker of hard drives. The company produces all the components of HDDs in-house, everything from media substrates to platters and from head substrates to HGAs (head gimbal assembly) and HSAs (head stack assembly). Obviously, it performs final assembly and testing too. At present Western Digital has three factories that produce hard drives: the largest one is located in Bang Pa-In (Thailand), the second largest one is situated near Kuala Lumpur in Petaling Jaya (Malaysia), and the smallest one is sited in Prachinburi (Thailand). Meanwhile only the largest one is more or less vertically integrated and makes not only HDDs, but also many of their components (see the table below for details).

The total available market of hard drives dropped to around 400 million units in 2017, down from around 550 million units in 2014. As a result, both Seagate and Western Digital have been reducing their HDD manufacturing capacities in the recent years. Seagate shut down its HDD assembly factory in Suzhou, China, in 2017, whereas Western Digital closed down its head wafer facility in Odawara, Japan, in 2016. While the HDD TAM has been on the decline for years now, sales of nearline hard drives featuring a massive capacity for datacenters have been growing. Therefore, neither Western Digital nor Seagate have plans to limit production of these products.

“In response to declining long-term demand for client HDDs, Western Digital has taken steps to rationalize its HDD manufacturing operations globally,” a statement by Western Digital published by The Register reads. “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 production facility in question was established in 1973 and initially made semiconductors. Since the factory had a clean room, it was relatively easy to convert it to an HDD assembly plant in 1994. After the facility is decommissioned, Western Digital intends to sell the site near Kuala Lumpur. What remains unclear is what is going to happen to Western Digital’s sites near Johor and Kuching, where the company makes HDD components. The company also did not disclose its plans for its HDD R&D facility near Kuala Lumpur that was added to the plant in 2010 – 2011 and cost $1.2 billion.

Instead of making hard drives in Malaysia, Western Digital says it plans to expand production of SSDs in the country and will commission another SSD assembly factory in Penang in the coming months.

“Market transformation is driving increased adoption of SSDs and NAND flash in traditional HDD applications,” the statement by Western Digital reads. 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.”

It is noteworthy that production of SSDs is relatively easy and cheap. Assembly of SSDs does not require state-of-the-art facilities, unlike production of NAND flash memory and assembly of HDDs. Meanwhile, by adding another SSD production plant in Malaysia, Western Digital will have three SSD assembly factories: one in Shanghai, China and two others in Penang, Malaysia.

Western Digital's's Manufacturing, Development, Marketing and Administrative Facilities
Location Primary Use Type of Products* Approximate Area Ownership
USA California Fremont R&D,
Manufacturing of head wafers
HDDs 392,000 ft² Owned
Irvine R&D,
Administrative, Marketing, Sales
490,000 ft² Leased
San Jose R&D,
Product/Head/Media Development, Manufacturing of head wafers
2,887,000 ft² Owned/Leased
Milpitas R&D,
Administrative, Marketing, Sales, Operations
SSDs 589,000 ft² Owned
Colorado Longmont R&D HDDs 62,000 ft² Leased
Minnesota Rochester Product Development 118,000 ft²
China Shanghai Assembly & Test of NAND Flash ICs SSDs 715,000 ft² Owned
Shenzhen Manufacturing of Media,
HDDs 548,000 ft² Owned/Leased
Japan Fujisawa Product Development 661,000 ft² Owned
Malaysia Johor Manufacturing of Substrates 271,000 ft² Owned
Kuala Lumpur R&D,
Manufacturing of HDDs
1,074,000 ft²
Kuching Manufacturing and Development of Substrates 285,000 ft²
Penang Assembly and Test, Manufacturing of Media and SSDs, and R&D SSDs 1,075,000 ft²
Singapore R&D,
SSDs (?) 324,000 ft² Leased
Thailand Bang Pa-In R&D,
Slider Fabrication,
Manufacturing of HDDs,
Manufacturing of HGAs
HDDs 1,665,000 ft² Owned
Novanakorn Manufacturing of HGAs 290,000 ft²
Prachinburi Manufacturing of HDDs 729,000 ft²
India Bangalore R&D,
Marketing, Administrative
SSDs 220,000 ft²
Israel Kfar Saba R&D,
Marketing, Administrative
167,000 ft²
Tefen 64,000 ft²

*Products originally developed/made in the facility.

Related Reading

Sources: The Register, TheEdgeMarkets

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  • Magichands8 - Thursday, July 19, 2018 - link

    Yes after all these years that we've had SSDs the prices and the interface (SATA) are ridiculously high and outdated. Hopefully this news is a step in the right direction to fixing part of the problem.
  • Impulses - Friday, July 20, 2018 - link

    SSD prices had been decreasing pretty steadily until the NAND shortage of the last two or so years... I paid like $200-ish for an 80GB X25-M G2, not much more than that for 128GB 830s (second one was on clearance but I forgot how much it was), $300 for a 500GB 840 EVO I gifted, $300-ish for each of my current 1TB 850 EVOs... Then it all grinded to a halt.

    When I built by 6700K system (with a 256GB SM950 for the OS and the 850s for other stuff) I would've easily expected to be able to pay $300 for a 2TB SATA drive by now but prices stood still for much of last year and the better half of 2016. At least they seem to be dropping slightly again...
  • madwolfa - Friday, July 20, 2018 - link

    Crucial MX500 2TB was just slightly above $300 this Prime Day... I wish it was under 200 though.
  • Targon - Friday, July 20, 2018 - link

    If you look at capacity and performance, prices have actually been dropping. Now, when you start to consider things like NVMe vs. SATA SSD prices, then you see that the new and faster are still expensive, but the older type has seen a significant price drop. A key that you may not have considered is also the performance of SATA SSD drives of today is faster than it was in the past, so you do end up with, "price isn't coming down much, but performance is better". This is typical of any technology. I remember back when a 14 inch black and white TV was $200, then a few years later, a 14 inch color TV was $200, then a 17 inch color TV was $200, then 20, then 25 inch, all at the same price. Beyond the 25 inch, you saw issues with the weight and shipping prices due to size, so things were stuck for a while before flat panels came out, then LED backlit, but there was the move from 720p to 1080p, then smart-TV. With storage, conventional hard drive prices came down very well, but with the move to SSDs, we see other issues.

    I expect the next shift, once the initial novelty of SSD calms down will be unpowered longevity so that SSDs can be left unpowered for a few years and still retain their data.
  • DanNeely - Thursday, July 19, 2018 - link

    Closing this site really does show how the shrinking market is biting. Depending on how much of the Bang Pa-In facility is devoted to making HDDs vs components, this is taking somewhere between 30 and 60% of their HDD assembly space out of service.

    I suspect it's on the low end of the range, but even that suggests they probably have enough free space across their other locations to close out a few more locations and consolidate operations farther. I'd guess the manufacturing facilities at Irvine CA, and Novanakorn Thailand are most at risk since they're small sites whose manufactured product is also made at a second much larger location. After that probably either the Johor and Kuching locations in Malaysia since they're the only other pair of same product factories; but since they're equal size buildings it might take a 50% slump before one is able to carry the entire production load.
  • mr_tawan - Thursday, July 19, 2018 - link

    I only hope there won't be flooding this year. But given that the Wild Boars team got stuck in the cave because the rain comes early this year, it might be wise to be prepared. ...

    I mean, the Thailand's Bang Pa-In is in one of the most flooding-risk area in the country (that's what I've been told, no evidence to back up though). The 2011 flooding causes global HDD outage if I'm not mistaken.
  • 0ldman79 - Friday, July 20, 2018 - link

    I'm honestly not sure how I feel about that.

    I still want a mechanical drive for my mass storage and especially my DVR drive.

    I don't need massive sustained writes, 10MBps is probably my peak, but I'd rather not worry about using the drive killing the drive. There is a certain degree of writing on magnetic drives that keeps them up, of course with the newer writing technologies (MAMR springs to mind amongst others) that may not be the case any more.

    The old guy in me wants to buy a bunch of old 1TB and smaller, standard old vanilla or at least perpendicular drives before they disappear.

    I want an SSD for my OS, I'm okay with a fast spinner for my games (load time is *much* better without an OS on the same drive, always has been) but I want a huge mechanical drive that I can beat up with my DVR without worrying about killing it. It may not even be logical at this point with .3 WPD on a 1TB SSD, but it still bugs me.
  • jordanclock - Friday, July 20, 2018 - link

    Well, it's not like HDDs are going to disappear, even in the next few years. Just because the trend is downward doesn't mean that it's going to zero. I suspect HDDs will remain for a long time for very large, cheaper storage.
  • DanNeely - Friday, July 20, 2018 - link

    The last estimate I saw - from a few years ago - was predicting a mid 2020s crossover in TB/dollars. I'm not sure how much, or if the current supply shortage resulting in 'stuck' prices will impact that. Sooner or later capacity will finally catch up and flash prices should drop a lot and end up back on the track. Without illegal collusion there's no way for all the makers to increase production enough to sell more without ending up finally being able to meet demand and releasing the stuck prices again.

    I am anticipating that my 2019 NAS will likely be my last HDD purchase. Even if the crossover shifts to the late 2020s, by the 2024-6 when I'm likely to be making another one the crossover will presumably be close enough that the cost delta won't be that large, and being able to drop to a router sized NAS instead of a small box of books to miniPC sized one with lower power consumption is worth paying slightly more up front for me.
  • MamiyaOtaru - Monday, July 23, 2018 - link

    i just worry that price parity will be reached by using PLC or HLC or something. I'm not really interested in TLC, never mind QLC. Hell I'd get SLC if I could, but even MLC is pretty damn scarce now :(

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