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  1. Technology
July 21, 1998


By CBR Staff Writer

Disk head manufacturer Read-Rite Corp is to close its Malaysian operations, with the dismissal of over 4,000 staff. The Milpitas, California-based company, which has just reported nine-month net losses of $290.3m from a profit of $60.5m last time, on revenue down 25.0% at $632.7m (CI No 3,454), says it has been forced to close the plant due to low product demand, low production volume and increasing costs in the data storage market. The 4,128 staff affected by the closure of the plant in Prai, part of Penang, have been given their official notice, and some 460 will stay until October to ensure a smooth closure. Read-Rite considers Penang to be its least important Asian site and has confirmed that sites in Thailand and the Philippines will take on the extra work created by the Penang closure. Read-Rite may sell the plant, and it is currently considering offers from four companies. It has also received offers from 19 companies to hire up to 1,500 of the departing staff in production, engineering, administrative and technical positions. In the last quarter, Read-Rite took a $137.5m restructuring charge, which contributed to its poor performance in the year to date. Read-Rite has invested some $80m in the Penang plant since 1994, having opened it three years earlier. In March, Read-Rite cut 250 staff in the US (CI No 3,368), and these latest cuts mean the company has reduced its worldwide workforce by 28% from the 25,000 it had on the payroll in December last year, to its current 18,000.

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