NTN Corporation (Japan) and Nidec Corporation (Japan) recently suspended their plan to build a new joint venture factory to produce hydrodynamic bearing disk drive motors in the Philippines. Instead, the companies have just announced they will now build that factory in Zhejian, China.

The joint venture was announced in November 2001 and was to have been well underway by now. Instead, NTN-Nidec Philippines Corp. is being dissolved.

An NTN spokesman said the decision to build in China was made for them; their major customers have shifted disk drive production to China at an unexpectedly rapid rate. NTN and Nidec had no choice but to follow, citing lower procurement and operating costs, along with the need to be physically closer to their customers.

The two companies' joint venture, now NTN-Nidec Zhejian Corporation (China), is being set up and the factory is expected to come online sometime during first quarter 2003. NTN owns 60% and Nidec 40% of the total initial capitalization of ¥1.6 billion.

The plant's initial production capacity will be two million fluid dynamic bearing spindle motors per month, ramping up to five million per month within a year.

The newest generation of computer disk drives uses spindle motors with fluid film or hydrodynamic bearings for improved performance over the previous generation of ball bearings. NTN was a key vendor of miniature precision ball bearings for disk drives, a market now all but gone.

The joint venture factory will produce fluid dynamic bearing motors designed by NTN and engineered to use their proprietary sintered metals technology.

Nidec is already building one plant on its own in China to produce fluid bearing disk drive motors. The factory, also in Zhejiang Province, is the company's eighth but its first in China. Named Nidec Zhejiang Corporation, construction began in April with production ramp-up scheduled for early October 2002. The company expects to spend USD $200 million on the factory, and projects it will employ over 10,000 workers by 2004.

Nidec has over 70% share of the world market for computer disk drive motors. It manufactures fluid dynamic bearings for its precision motors at four plants in Thailand, one in Singapore and two in the Philippines. The two factories in China will be its eighth and ninth.