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2008-2013 Capital Equipment and Technology Report for the Hard Disk Drive Industry
Coughlin Associates , May 2008, Pages: 177
Demand for traditional computer applications is growing but hard disk drives in mobile and consumer applications are experiencing the greatest growth of any market segment and will be in the majority of all hard disk drives by the next decade. This will result in over 100% growth in total drive unit shipments between 2007 and 2013. This increase in volume will drive capital equipment to sustain the manufacturing volume. Likewise the introduction of heat assisted magnetic recording (HAMR) and patterned media (DTR or BPM) will require purchase of new equipment and development of production processes by all manufacturers by 2010. All of these factors will cause unprecedented but controlled growth in the demand for production process equipment, production test equipment and metrology equipment.
This report will explore the drivers for new HDD demand growth and set expectations for what this growth will require in terms of production and process, production testing and metrology capital equipment. We will describe the changes in HDD technology and unit volume and what that will require in terms of production and process equipment. We will look at developments in production test and metrology driven by the need to minimize the impact of test on total drive and component cost as well as increasing drive yields and reliability.
Some highlights on the report methodology are:
- Accuracy of final data is about +/-15%
- Analysis is based on top-down (customer spending trends) and bottom-up (vendor sales trends) from interviews with knowledgeable people in the industry
- Data forming the basis of the model was collected from a combination of public and private sources both domestic and abroad
- We checked revenue/spending numbers with appropriate product pricing and volume calculations
- Future projections (through 2010) are based upon current trends and expected forthcoming developments (volume expansion and technology developments)
- We assume over 100% growth in disk drive volume (from about 501 M to 1.1 B) from 2007 to 2013
- We assume 262% growth in capital equipment spending from 2007 to 2013 (~15% growth from 2007 to 2008)
--Capital spending to meet new demand
--Capital spending to meet new technology requirements such as HAMR and DTR
--Capital spending to update facilities and processes
--Assume ~77% of HDD and component company total capital spending overall is on process equipment (rest on facilities, etc.)—balance on buildings and building infrastructure, etc.
The particular manufacturing spending/revenues categories discussed here are drives; head wafers/sliders/HGAs; as well as disks and disk substrates. The spending in these categories is further broken down into spending/revenue for production process equipment, spending/revenue for production testing equipment and spending/revenue for metrology equipment. Production and process equipment includes basic assembly and manufacturing tools including automation, contamination control and manufacturing operations.
Not included in production and process equipment spending is capital spending on building and basic facility expense such as DI water, gas lines, HVAC, etc. Production test equipment includes drive burn-in racks and testers, certifiers, contamination monitoring equipment as well as servo writers and equipment often classed as metrology equipment but which is used continuously or often on the production line. Metrology equipment refers to measurement equipment that is used less often on the production line, is used for failure analysis, gauging and standardization, less frequent AQL testing, etc.
We have identified in this report information from both captive and merchant test equipment suppliers. The distinction is important. Merchant suppliers are eager to garner more business from captive suppliers in order to grow their available market. However, captive suppliers in the past have felt that they are better able to tailor test solutions to specific requirements while controlling the technology and diminishing their reliance on outside suppliers. This make/buy decision continues to be a critical element affecting the fortunes of independent test equipment suppliers; however the trend is to use more outside suppliers.
This report is based upon recent interviews and analysis as well as historical data from prior reports on capital spending by the author. Capital spending reported here is estimated to be within about 15% accuracy of total spending by HDD companies, their component suppliers as well as sub-suppliers. In the course of obtaining the information contained in this report we have contacted or visited many test and process equipment companies, most of the disk drive manufacturers, and several head, media, and sub-components suppliers.
During our interviews we received information concerning forecasts, expected technology directions and future requirements. We wish to express our thanks to all who contributed their knowledge and foresight. In compiling this report we have not included all the detailed data we have gathered. As usual if you have any questions or require additional information please contact us. We are open to provide information readily available to us (with due regard for the confidentiality of our sources) or develop it for you on a project basis.
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