Singapore's Uraco to Make Parts for Seagate's New Disk Drive
Bloomberg News
February 25, 1999, 4:03 p.m. PT
Singapore's Uraco to Make Parts for Seagate's New Disk Drive
Singapore, Feb. 26 (Bloomberg) -- Uraco Holdings Ltd., one
of Singapore's biggest makers of computer disk-drive components,
said it'll make parts for a new disk drive being assembled by
Seagate Technology Inc.
Seagate, the world's No. 1 independent computer disk-drive
maker, said it'll make a large number of the new disk drive model
-- called U4 -- in Singapore for use in sub-$1,000 personal
computers. The disk drive has a capacity of 4.3 gigabytes and
5,400 rpm.
Seagate already accounts for 20 percent of Uraco's sales,
mainly sub-contract work for the multi-national's high-end disk-
drives. The new contract is seen helping Uraco, which lost S$14.7
million in fiscal 1998.
''That extends our scope of business with Seagate,'' said
Philip Tan, Uraco's finance director. ''We were a high-end base
plate maker for Seagate -- now with U4, we have extended our
scope.''
The new Seagate contract couldn't come at a better time. The
number of disk drives shipped this year is expected to rise 18
percent to 171.1 million, with a 7 percent revenue increase to
$27.63 billion, market researcher TrendFOCUS reported last month.
Seagate, which is Uraco's biggest customer, also expects the
number of units to rise by more than 20 percent in 1999 as demand
accelerates.
''The industry as a whole has picked up,'' Tan said. ''For
the last two quarters, sales were affected -- but when the
industry picks up, we'll benefit from the upturn.''
Other key Uraco customers include Maxtor Corp. and
International Business Machines Corp.
Analysts Optimistic
Analysts are optimistic the new contract for base plates, or
frames for disk drives, could pull Uraco out of the red.
''We see this as a breakthrough for Uraco,'' said Edwin Goh,
an analyst at Singapore's Keppel Securities Pte. who has a
''buy'' on Uraco. ''With things turning up, they'll most likely
end the year profitable.''
Goh estimates Uraco's profit for the year ending July at
S$2.5 million.
Uraco's also expected to see a rise in orders for components
of semiconductor equipment. Earlier this month, the Semiconductor
Industry Association said global chip sales rose 11 percent in
the fourth quarter from the third.
Applied Materials Inc., the No. 1 semiconductor-equipment
maker, could be a potential customer.
''We're approved by Applied Material as a supplier,'' he
said. ''And we're committed to support (original equipment
manufacturers) in the front-end equipment industry.''
Goh said his earnings forecast is based on the potential of
Allied as a customer as well because ''with the industry turning
up again, they'll be able to see contributions from there.''
Uraco's production lines are also less quiet these days. It
expects the use of its equipment to reach 80 percent capacity
next month from 40 percent a year ago.
''Volume is very good, certainly,'' Tan said.
Uraco's stock price has surged 8.9 percent in the past two
days.
Singapore is the world's disk drive capital, producing about
four in every 10 disk drives made. |
