Nidec to Build New HDD Motor Plant in Vietnam
Tue Dec 20, 2005
By Kiyoshi Takenaka and Kunihiko Kichise
KYOTO, Japan (Reuters) - Nidec Corp. (6594.OS: Quote, Profile, Research), the world's largest maker of precision motors, said on Tuesday it planned to start building a new plant for hard disk drive (HDD) motors in 2006 in Vietnam to meet fast-growing demand.
In an interview with Reuters, Nidec Chief Executive Shigenobu Nagamori said he plans to raise Nidec's output capacity for HDD motors by one-third within a year, and aims to boost operating profit by nearly four times by the year starting April 2010.
The global market for HDD motors is booming as HDDs are used in a range of electronics besides PCs, including car navigation systems and portable music players such as Apple Computer Inc.'s (AAPL.O: Quote, Profile, Research) iPod.
"We are experiencing explosive demand growth from the CE (consume electronics) market, such as DVD recorders, and our capacity is barely meeting demand," Nagamori said.
"If something could ever cause us to lose our share in the future, that would be supply capacity problems."
Nidec, which is expanding output capacity at its existing plants in China and the Philippines and building a new plant in Thailand, plans to boost its overall capacity for precision motors used in HDDs to 40 million units a month by late 2006, up from 30 million units now, Nagamori said.
On top of these manufacturing facilities, Nidec plans to start building another HDD motor plant next year in Vietnam, he said, in a move to solidify its dominance.
Nidec aims to raise its share in the global market for HDD motors to 75 percent in January-March from 72 percent now, Nagamori said.
Nidec supplies precision motors to all the world's major HDD makers including Seagate Technology (STX.N: Quote, Profile, Research) and Hitachi Ltd.'s (6501.T: Quote, Profile, Research) HDD unit. Its smaller rivals include Minebea Co. Ltd. (6479.T: Quote, Profile, Research).
Nidec's capital expenditure for the year ending next March is now expected to be 45 billion yen ($387.6 million), up from its original forecast of 40 billion yen, Nagamori said.
He added that its capital spending for the next business year would remain unchanged from the current business year.
GROWTH AHEAD
Nagamori, a 61-year-old engineer, founded Nidec in 1973 at the age of 28, and still holds an 8.3 percent stake in the company, based in Japan's ancient capital city of Kyoto.
Helped by its competitive strength in its HDD motor business, Nidec aims to boost its group operating profit to 200 billion yen by the business year starting in April 2010, up sharply from an estimated 55 billion yen for the current business year, he said.
Nidec also targets 1 trillion yen in sales in 2010/11, compared to an estimated 520 billion yen in revenues for the current business year.
Nidec already has a track record for rapid growth. Over the five-year period through the year ended March 2005, its operating profit grew more than five times and sales expanded nearly three times, driven in part by its aggressive purchases of competitors.
Companies that had been bought by Nidec and turned around by Nagamori include optical pickup maker Nidec Sankyo Corp. (7757.T: Quote, Profile, Research) and auto parts maker Nidec Tosok Corp. (7728.T: Quote, Profile, Research).
"I will keep pursuing M&A opportunities ... About 30 companies are now on my radar screen. But I have no specific timetable for them. Hasty moves would do no good in this business," Nagamori said.
Prior to the interview, shares in Nidec closed up 2.5 percent at 9,400 yen, outperforming the Tokyo stock market's electrical machinery index (.IELEC.T: Quote, Profile, Research), which gained 0.8 percent.
($1=116.09 Yen)
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