Read-Rites' Shareholders' Meeting - 2/25/99
Facilities Tour
After the meeting RDRT offered a tour of the Fremont facility, and of course I went. It turns out the Milpitas facility that I had my unauthorized tour of before (last spring, as I recall) is only the tape head group, which is, as I understand it less than 10% of revenues . Fremont makes the wafers for the Hard Drives heads, which is the meat of RDRT's business. They ship those square wafers to Tailand for processing into Gimbels and then to the Philippines to make Head Stack Assembles. The two off shore activities are done for labor cost reasons.
The wafers are not like the silicon that you'd expect. They are not round, they are 6" square and nearly 80 times the mass of a standard silicon wafer. I did not write down what materials they are made of, but the thickness are 79 mils versus a normal silicon wafer of 5 mils. That means that RDRT needs to do special handling and processing of the wafers. They indicated that the usual problems of the outer edges of the round wafers is not as much of a problem with their square wafers and their processes and requirements. As it was explained a wafer for a head only requires about 30% of the surface to be circuitry, compared to other industry uses which might have 90% of the surface being circuitry.
You might ask why a square wafer? Seems that RDRT was thinking about the shipping cost right from the start. Shipping round wafers increases shipping cost and waste. RDRT is the only manufacturer using a square wafer. But then they are the only manufacturer that can ship, as I recall the discussion, 4 times the volume of wafers on a pallet compared to round wafers.
In visiting with the tour guides I learned something that surprised me. RDRT only needs about 50 to 60% of the wafer production to make current revenue targets and service customer needs. The remaining production is in full swing and is being used to make qualification sample heads and work on perfecting the Nano to Pico conversion that is in process (see Note from Shareholders' Meeting). This remaining production is also all GMR heads!!!
What that tells me is that when Cyril says the conversion to GMR will be fast, he is not kidding. It appears in fact that it is already nearly here.
One more thing, the parking lot was full, very full. All of the wafer fab was busy and production and morale seemed to be in full gear. This is a company just working its way through a sector that has decided to have competitors of the final assemblies, hard drives, fight for share on price. And they are working to be number one, no matter who wins that war!!!
Later,
(-8 Dennis 8-)
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