Nidec Building Fluid Bearing Motor Plant in Vietnam

Nidec Corp. (Japan) announced it will build a fluid dynamic bearing disk drive motor plant in Vietnam, one of the last frontiers of low-cost wages in the Asian marketplace. Nidec is the leading manufacturer of fluid dynamic bearing motors used in computer disk drives. Fluid dynamic bearings have now almost completely displaced miniature ball bearings for that application. Nidec currently holds a 72% world market share for the drive motors, and is targeting 75% in the short run. Although that article (from 2001) mentions 5,400 RPM motors, newer hydrodynamic disk drive bearings allow spindle speeds topping 7,500 RPM in common, low-cost disk drives. By comparison, ball bearing drive motors are generally limited to 4,200 RPM. Higher speeds translate directly to faster data access and overall better performance in the devices using the drives. Also, fluid bearing motors have proven to be far more reliable than ball bearing motors, and even allow for a relatively high level of shock absorption, important to consumer device applications. Scheduled to begin construction in mid-2006, Nidec's Vietnam fluid bearing motor plant will add to factories in China, the Philippines and Thailand -- all running at or near capacity. Japanese manufacturers have increasingly been turning to Vietnam for manufacturing, as the country has become business-friendly and politically and economically relatively stable. The Vietnamese Embassy recently stated Japanese manufacturers invested almost USD $400 million building plants there in the first half of 2005 alone. Since entering the country in 1994, Nidec has been a leading investor in Vietnamese factories, with at least $100 million involved in several electronic and industrial component plants in and around Ho Chi Minh City. Nidec broke ground on its most recent Ho Chi Minh City plant only this past August. In all, Nidec currently employs more than 4,000 workers in Vietnam. More recently, Kunihiko Nishihara, head of Nidec Tosok in Vietnam, estimated the company will spend an additional $500 million in Vietnam by 2010. Mr. Nishihara said, "Nidec's investment capital in Vietnam will be as high as in Thailand (approximately $2 billion) in the long term." Mr. Nishihara went on to make a bold statement about manufacturing prospects in Vietnam: "Our idea is to create a 'tripod' position. It means that our investment in Vietnam may be even higher than Thailand and equivalent to China in the near future. Vietnam will become our second production base after China." The fast-growing demand for fluid dynamic bearing motors is being driven by parallel demand for disk drives. Drives are now not only used in computers, but also in automotive navigation systems, portable music players, video recorders, audio recorders, and many other devices which either did not exist or had formerly used analog recording technologies. Nidec's target is to boost production of fluid dynamic bearing motors to 40 million units per month by later this year, said CEO Shigenobu Nagamori. The company's current worldwide capacity is 30 million units per month. Mr. Nagamori said: "We are experiencing explosive demand growth from the consumer electronics market, such as DVD recorders, and our capacity is barely meeting demand. The only thing that could impact our market share in the future is capacity problems." Nidec's primary competitor in the hydrodynamic bearing motor market is Minebea (Japan).