Seagate 2002 Annual Report Download - page 7

Manufacturing
We pursue an integrated business strategy based on the ownership of critical component technologies. This strategy allows us to maintain
control over our product roadmap and component cost, quality and availability. Our manufacturing efficiency and flexibility is a critical
element of our integrated business strategy. During the past several years we have made significant improvements in our manufacturing
efficiency by:
• consolidating the number of facilities we operate and reducing the number of personnel we employ;
• expanding manufacturing automation to enhance our efficiency and flexibility through our Factory of the Future initiative;
• applying Six Sigma to improve product quality and reliability and reduce costs;
• integrating our supply chain with suppliers and customers to enhance our demand visibility and reduce our working capital
requirements; and
Manufacturing our rigid disc drives is a complex process that begins with the production of individual components and ends with a fully
assembled unit. We design, assemble and/or manufacture a number of the most important components found in our rigid disc drives, including
read/write heads, recording media, printed circuit boards, spindle motors and ASICs.
Read/Write Heads . The function of the read/write head is to scan across the disc as it spins, magnetically recording or reading
information. The tolerances of recording heads are extremely demanding and require state-of-the-art equipment and processes. Our read/write
heads are manufactured with thin-film and photolithographic processes similar to those used to produce semiconductor integrated circuits.
Beginning with six inch round ceramic wafers, we process more than 25,000 head elements at one time. Each of these head elements goes
through more than 300 steps, all in clean room environments. Our read/write heads require highly advanced processes with tolerances
approaching the thickness of a single atom. We perform all primary stages of design and manufacture of read/write heads at our facilities.
Although the percentage of our requirements for read/write heads that we produce internally varies from quarter to quarter, we currently
manufacture almost all of our read/write heads.
Recording Media . The function of the recording media is to magnetically store information. The domains where each bit of magnetic
code is stored are extremely small and precisely placed. As a result, the manufacturing of recording media requires sophisticated thin-film
processes. Each disc is a sequentially processed set of layers that consist of structural, magnetic, protective and lubricating materials. Once
complete, the disc must have a high degree of physical uniformity to assure reliable and error-free storage. We purchase aluminum substrate
blanks for recording media production from third parties, mainly in Japan. These blanks are machined, plated and polished to produce finished
substrates at our plant in Northern Ireland. Although the percentage of our requirements for recording media that we produce internally varies
from quarter to quarter, we currently manufacture almost all of our recording media requirements. We plan to expand our media production
facility in Singapore during fiscal year 2004 to further increase our production capacity. Our strategy is to purchase no more than 20% of our
recording media requirements from third-party suppliers in any given quarter.
Printed Circuit Boards . We assemble and test a significant portion of the printed circuit boards used in our rigid disc drives. Printed
circuit boards are the boards that contain the electronic circuitry and ASICs that provide the electronic controls of the rigid disc drive and on
which the head-disc assembly is mounted. We assemble printed circuit boards at our facilities in Malaysia and Singapore.
Spindle Motors . We design most of our spindle motors and purchase them principally from outside vendors in Asia, whom we have
licensed to use our intellectual property and technology.
ASICs . We participate in the design of many of the ASICs used in our rigid disc drives for motor and actuator control, such as interface
controllers, read/write channels and pre-amplifiers. We do not manufacture any ASICs but, rather, buy them from third-party suppliers.
5
• coordinating between our manufacturing group and our research and development organization to rapidly achieve volume
manufacturing and enhance our product quality and reliability.