This paper takes Western Digital (WD) Kuching as a case study for high-tech product manufacturing. High-tech product manufacturing must be differentiated from the manufacturing of other products where the specs do not change much. The most notable example of this is the manufacture of canned foods which have been known to have looks, contents and taste that remains the same for up to 50 years [1]. Comparatively in high-tech product manufacturing, improvement or change in specs of the product must be done every day to survive as a business. 

This author worked in the Western Digital (WD) factory in Kuching, Malaysia for 14 years and it can best be described as in a continuous war to stay alive. Most employees work as well as they can, not knowing if the factory will be around the next day. Historically the most successful leader of the WD factory in Kuching was Kevin Tompkins. It must be his experience fighting in the Vietnam War which built his character to be a good leader of the Kuching HDD factory [1].

Since it has always been said by top philosophers that we must learn from our failures, the first portion of this paper describes the critical mistakes which changed the landscape of high-tech manufacturing. Specifically, how IBM lost her HDD manufacturing division. How Komag died. How over 20 HDD manufacturing companies located in the USA, Japan, South Korea and Taiwan have all died, leaving only WD, Seagate and Toshiba manufacturing HDD in the world today with WD and Seagate controlling 90% of the market share. How the Kuching WD factory was eventually closed. How Kodak went from a huge conglomerate to just struggling for survival now.

Major Mistakes Made In The High-Tech Product Manufacturing

IBM was the inventor of the hard disk drive (HDD) in 1956 [2] but was forced to sell off that business in 2003 after 47 years. One critical engineering decision caused this. Customers were changing from desktop computers to laptops. Unlike the other about 20 HDD manufacturers, IBM had the resources to study consumer data to determine with sound statistics that the change from desktop to laptop was a fact. The IBM research team then decided that since laptops have a much higher chance of being moved while the HDD is powered on, it is imperative that the HDD platter should be changed from the Al coated with NiP (Al-NiP) to glass. The logic behind this decision is that since Al-NiP is relatively soft and if the read/write (R/W) head falls on the HDD due to the laptop being moved when the HDD is powered on, it would be like throwing a stone in a still lake. Ripples will form, thereby damaging a lot of data. Comparatively if glass is used as the HDD platter, a falling R/W head will only make a small dot on the platter damaging only a little data. IBM decided to change all their HDD to glass and quickly closed all their Al-NiP plants. This was when the HDD technology was at about 80GB per platter. But when it came time to change to 120GB per platter, IBM struggled, they could not achieve it before the other companies could [3]. Those companies stuck with Al-NiP due to a lack of resources to make the changes following IBM’s lead. It was possible that IBM’s technical talent in her HDD division was already stretched thin due to the massive change in the company’s process from Al-NiP to glass. But a sure fact is that glass is a relatively new material compared to metals. Metallurgy is a vast subject which humans have been developing very far back in history. And in all the HDD companies there were vast resources on the specific metallurgy of Al-NiP. This huge database was necessary because even a tiny half mm increase in surface area on the HDD platter can increase the data density by a large amount. The current HDD platter density is 2 TB per platter since both WD and Seagate have released the nine-platter drives which have a data capacity of 18TB [4]. One can imagine a customer going to a computer shop in 2002 and seeing the display of an IBM HDD which has only 80GB storage space while a WD one has 120GB storage space and both have about the same retail price. Nobody will purchase the lesser IBM HDD except for a very few richer customers who believe (correctly) that IBM HDD is technologically better made and will last longer [5]. But companies are made or broken due to the average customer who have two characteristics; they tend to be poorer and do not think of keeping their devices too long. The younger customers want a higher capacity HDD with the thought in the back of their mind that they will be financially better off before the HDD fails. Therefore by 2003 IBM was forced to sell off its HDD industry to the financially huge company, Hitachi which had motivations to get some of IBM’s technology [6]. Thus was born HGST, Inc (Hitachi Global Storage Technologies). It is highly possible one person or a small group was responsible for IBM’s colossal failure. That decision maker must have been a highly qualified engineer from a top university but did not have the war fighting attitude which may not necessarily be a soldier-to-soldier fight but a strategic fight. The IBM researcher used only one fact, that glass can withstand head crashes on the HDD platter better. The other strategic factors like glass being a relatively newer material and therefore harder to modify was not considered in making the decision [7]. 

The next instance of failure is that of Komag. Komag was started by a Taiwanese American, Dr. Tu Chen who was based in Silicon Valley, USA. While Dr. Tu Chen was the leader, the company was trudging along, never too big or small but severely bad decisions were not a feature of Komag because Dr. Tu Chen was always getting his hands dirty and started the company from scratch. He would be seen in the factory in Silicon Valley, carrying spanners to repair machines which he thought were critical to getting his production going [7]. Basically, he was like an olden times king who fought battles with his soldiers. Later he left the company as it became a public company listed on NYSE. So professional managers ran the company. 

Over time a husband-and-wife team became the leader of the research team at the Silicon Valley headquarters of Komag. This episode could probably be a data point indicating that husband and wife teams running an organization is not a good idea [9]. One of the processes in the Kuching factory was to polish a disk. So, just as a rough sandpaper is used initially to polish an artifact and finally a smooth sandpaper is used, a nine-ton polishing machine was initially poured with a rough silicate liquid (slurry) representing the sand in the sandpaper. Disks are placed between pads which are designed to have holes, like upside-down alveoli of the lungs. Each upside-down alveolus would store a little silicate each. And this silicate will polish the disk. Firstly 168 disks are loaded on a polishing machine. They are polished and then removed and loaded into a cleaning machine to totally clean off the rough silicate particles. Then the 168 disk are loaded onto another similar nine-ton polishing machine. Here a finer silicate is poured to achieve smooth polishing. But the husband-and-wife research head somehow convinced the management that only one polishing machine is sufficient. The rough slurry is first poured then a high-pressure water jet spray will clear off all the rough silicate and then another cycle of polishing will be done with the finer silicate poured on the same machine. This author was managing production at this time and prior to this change, he would go to the end of the production line where sits a lady Visual Inspectors (VI) who will take a sample of disks and look for defects under a strong light. Prior to this change the VIs will often call this author to inform of specific defects and this author would never be able to see what they see. After this change, this author could see the defects the VIs highlighted from a meter away. And the defects were so much that their criteria for calling a defect had to be reduced by a great amount. How Seagate or WD sampled the products they were going to buy from Komag was, they would go to Komag’s warehouse and randomly pick a cassette of 25 disks. If they find one defect, they will reject up to 100,000 disks. Scrap Yards around Kuching were doing good business. Due to this Komag had to eventually die and WD bought over Komag [10]. 

It must be noted that management was easily convinced because this information came from the research head. Since management tends to look at the bottom line in terms of money they can make. Cutting two machines (a polishing machine and a cleaning machine) from each row of production machines meant releasing all the manpower from those machines plus doubling production numbers because both the first and second polishing machine became able to produce the final product. A huge reduction in cost and doubling of output was too appealing for a profit viewing management. Note management will be highly rewarded by the board of directors for increasing production over a short time. In this author’s opinion Dr. Tu Chen would never have fallen for this ploy of the research head because he knew every facet of the production. A lesson to learn from this episode is that the research head, though highly educated, did not have enough practical experience of even simple sand paperwork where an artifact must be totally cleared of the rough sandpaper particles prior to using the smooth sandpaper. Therefore, in secondary schools, subjects like building furniture, repairing vehicles and performing wiring jobs are very important to develop the right common sense among the future leaders of society. But a leader like Dr. Tu Chen is a sure bet that big mistakes are not made in a high-tech company. Another similar leader is Elon Musk whose deep involvement in the processes of his companies is developing success all around. It must also be noted that a technical leader like Elon Musk or Dr. Tu Chen will also attract the best and brightest from all around the world. It should be a rule that leaders of high-tech companies must be like them; totally technically educated plus having long experience on the floor of the factory. A person with a business degree person cannot run a high-tech company. But humility to listen to the lowest of workers could have solved the problem; if reports of defects from VIs were trusted by the research head, Komag need not die. But by then the whole production machines were already moved for a cost of $186,000 so an acceptance of the VI reports after the fact is acceptance of making the wrong decision from the start by the research head. So, they kept the production going and blamed the local management in Kuching for not running the production properly. It is probable that they hid the VI reports from the rest of management. Arrogance is one trait high-tech company leaders must totally negate [10]. 

A third observation of failure in the HDD industry is that of automation. Most people attribute automation to be the future but in the HDD industry it has proven to be disastrous. The automation in the HDD industry was especially prominent in the Japanese HDD factories. There were quite a few Japanese HDD manufacturers, even Mitsubishi. The Japanese were very interested in automation at that time and fully automated their HDD production. One researcher of Komag who went there saw aluminum being loaded at one end of the factory and HDD coming out at the other end. Automation is good for canned food where product specs need not change for 50 years. Research for the HDD was heavily done in the Kuching WD factory. The research team engineers themselves or with help from the Silicon Valley branch will go to one of the many machines in the production line, tell the operator to stack the products coming into that machine on stainless steel carts and the researcher may change something in that machine. Maybe a new chemical or even a faster flow rate of a chemical. They may even make hardware changes. They then follow the products which experienced this change to the end of the production line and bring it for 100% testing with various equipment to check their KQC (key quality characteristics). In the Mitsubishi plant of Japan, this cannot be done. To even make a flow rate change for one of many chemicals flowing into one out of 50 machines of the row, will require the whole 50 machines to be shut down. This will require the CEO’s approval. Comparatively the research engineer in the WD Kuching factory would not have told anyone in the world what he/she was doing. Many HDD companies’ CEOs of those times just stated that they had a research line and research could be done on those lines. The Kuching WD factory also had a research line but the researchers hardly ever used it. The reason for this is an empirical fact that whenever a production line is shut down and started again it will take up to 12 hours for the yield of the products to get up to 98%. It can drop down to 66% upon startup after a PM (preventive maintenance). No one in the factory understood this till this author met a manager of an Intel factory in the USA. He said their normal yield after PM comes back only after 48 hours. Why no one understood this was that during PM all parts are changed to brand new ones and proper cleaning is done to the machine. The reason for this drop in yield after PM is that in constantly running machines, the chemicals are constantly agitated and coagulation or solidification do not occur as much. This agitation of the chemicals is stopped during PM. There are many filters in the machines. Filters are a big source of coagulation of chemicals during PM. Therefore high-tech factories must run 24 hours×365 days. There may be a factory-wide shut down once in about two years if production demand is suddenly low [10].

Therefore, for a researcher in the Kuching WD factory to try anything on the research line, he/she (it was mostly she in the Kuching factory), will have to wait for 12 hours for the research line to have a 98% yield and all that wait was to just try just changing the flow rate of one chemical in the long row of machines. That researcher will have in the back of her mind that they are increasing global pollution in their research efforts and it will be good for the environment if they do the test on the production line. Besides, the output of research lines cannot be sold to customers [10].

Therefore, all the HDD factories which fully automated their production lines died. They simply cannot make the research jump to the next higher data storage density. This is the reason why today WD and Seagate produce 90% of worldwide HDD with 10% produced by Toshiba [11]. WD and Seagate were luckily weak in their ability to automate their production lines though they did try.

The next problem to learn from in the high-tech manufacturing space is that after Komag was bought by WD, the Kuching factory was shut down due to mismanagement. Western Digital started in Silicon Valley in the USA but due to the cost structure it moved all its manufacturing operations to Malaysia in 2000 when it was almost bankrupt. Today it has factories in Kuching,

Johor, Penang and Thailand. Kuching’s advantage is the cheap water and workers who tend not to quit and join other factories, mainly due to the lack of other factories to migrate to. Cheap water is critical because the process of hard disk manufacturing done in Kuching utilizes lots of water. The largest HDD factories are in Thailand. Malaysia used to be the location of most of the world’s HDD manufacturing but political problems and lowering English language proficiency among Malaysian workers have caused most of WD and Seagate factories to migrate to Thailand [12]. WD is currently the world leader in HDD manufacturing. Its success is attributed to shrewd business operations and competitors predicting that HDD will lose all market share to flash ram. This did not happen because humanity started storing data in clouds and clouds are 100% HDD, firstly because of their far lower cost and secondly SSD uses transistors, you fire it with electrons for a certain number of time and it will get damaged, like shooting a gun onto a wall. Comparatively in HDD, tiny magnets are flipped to change data and if the HDD are placed in a controlled environment as in a cloud where the temperature and vibration is totally controlled, a very long lifespan is possible. Being from the HDD industry, this author has a 14-year-old laptop which is still working because of not vibrating it especially when the HDD is powered on, plus always using a cooler under the laptop. Therefore, an even better controlled environment like a cloud facility can keep a HDD working easily for 25 years [12]. 

Globalization takes advantage of cheaper manpower or material that is offered by various countries. They locate their companies to achieve maximum profit. When the factory in Kuching started in 1995, there was good friendliness among engineers and workers. But over 14 years, the engineers felt superior to the workers, probably because of their very much higher salary. Their ego got into their head and started mistreating the workers. Because WD’s salary was the highest in Kuching, when the factory calls for an interview, the queue could be about a mile long. Therefore, engineers would say to senior technicians, “If you don’t follow my instructions, I will just hire one of the one-mile-long interviewees.” But if a proper calculation is done, this is a wrong statement to make because it is incredibly expensive to hire a new staff compared to correcting a senior staff. New staff statistically cause about 10 crashes of the polishing machine. Each time a crash happens, it takes two hours to bring it back to production [8]:

Therefore 10 crashes cost $4332 X10 = $43,320. The basic salary of a worker is MYR1000 = $250 per month.

Therefore, in payment terms, the cost of training a new worker in terms of their salary is 14 years of their salary.

So it is a total fallacy that a senior worker can be easily replaced by a new worker because it takes 14 years of salary for a new worker to reach the level of a senior worker [8,13]. Added to the above, the throughput is much slower for a new worker. Plus, there is the Human Resource required training and administration cost of taking in the new worker. An estimate is that it will take 16 years of their salary to train a fresh intake to be the level of a senior worker who does not crash the machine at all. So, engineers should try their best to find out workers’ problems and try to solve them. With WD’s engineers treating staff like that, they became disappointed and started a Union [14]. As soon as word of this got to the top management in Silicon Valley, the number two of WD flew down and interviewed all the technicians involved in the Union. He then gave a speech to the 200 plus degree executives of WD stating that the problem is not with the workers but the degree executives. He said he was giving WD Kuching engineers only a month to make friends with the workers or the factory will be closed. Half a month later this author asked a much more senior engineer why there was no activity organized to make friends with the workers. That senior engineer stated, “They can try”; meaning nobody can shut the factory down because the top management of the Kuching WD factory was very close to the local politicians. But the truth is that the western portion of the USA never had a Union. If the Kuching factory was allowed to have a Union, all 50,000 staff of WD worldwide will request for Unions including the WD at Silicon Valley. WD did not sell to the public much at that time. The main customers were like Dell, HP and other big computer manufacturers. Those customers can easily get angry with WD for introducing Unions to Silicon Valley and immediately cancel all orders and ask Seagate to manufacture all their needs. That means the death of WD. The local management of Kuching did not realize this fact. Therefore, the WD Kuching factory was closed in Mar 2009. A few years later, Sanmina, a neighboring American factory, also closed for the same reason. These two factories closing gave a huge impact to the economy of Sarawak. Workers could not pay for the loans they took to purchase vehicles or homes. All the food shops in the area suddenly lost more than 5000 customers. A third German chip manufacturing factory (fab) in the same area was worried the same scenario would spread to their factory and quickly made the friendliest engineer the next General Manager of the factory [8,15]. 

Most of WD, Kuching’s 2500 workers were retrenched keeping a 300-skeleton staff but the state government got HGST interested in purchasing the factory. Many years later WD bought the worldwide HGST which is why WD is back in Kuching, Malaysia. The same CEO of WD who closed the Kuching factory came back after finally acquiring it back by purchasing HGST.He gave a speech to all staff stating that it was a big loss to initially close the Kuching factory because the staff remained in the factory for a long time, making them one of the most skilled in all of WD. In the other HDD manufacturing centers like Johor & Penang of Malaysia and Thailand, staff tend to hop from factory to factory, thereby diluting skills. The decision of the WD CEO in 2009 was the right or else the whole WD would have died and it is now a $19 billion company and one of the main enablers of the cloud culture that is spreading worldwide [16].Corporations and even countries are hiring the likes of Google Cloud to store their data, which makes sense because a group like Google has the know-how to maintain the cloud and keep computer virus attacks or other forms of data attack at bay.Corporations or countries do not need to replicate Google’s expertise in this function and just purchase data space from Google.

The lesson to learn from this is that high-tech workers should not be treated like the slaves who built the Roman aqueducts. The previous leader of the neighboring fab stated that, if during lunch break a worker smuggled in a grain of salt and threw it in any of the chemical tanks, the whole factory production would be destroyed. It is very hard to police such behavior so it is better to just be good to the workers and thereby build their trust. Therefore the treatment of high-tech workers should be very different.

It is best to let the workers have all the information i.e., the 4W1H (who, what, where, when, why and how) of the factory and its production in real time. Insufficient knowledge of this has caused decision making mistakes. For example, if two customers want similar products the same machines can be used instead of scheduling a set of machines exclusively for a particular customer. This happened prior to WD taking over the Kuching factory when various customers like WD, Seagate and IBM purchased disks from the Kuching factory. With all the information with each worker, they may see disks being rejected and trace when they were manufactured and may even recall a change of production operation on that day which could have caused the defects and quickly make the appropriate improvements. The full knowledge will also give motivation to workers as humans need to be treated as humans and not robots [8,17]. Basically, as jobs increase in technology, humans must be treated more humanely [8,18]. Slave labor succeeded in building some ancient buildings but as technology of the product increases, a tiny mistake can destroy the product. Therefore, abusive behavior of supervisors to a production staff can spell disaster to a whole high-tech factory [19].

Company-wide sharing of profits is a good motivation for high-tech workers. While this author was working in Komag HDD factory prior to WD purchasing it, one of the main statements by workers to indicate an improvement is that it can “improve their profit sharing”; that statement is acceptable by all humans regardless of race or religion [20,21]. 

One top leader of Komag previously explained the problem with Unions. By law, only non-degree staff (or those below a certain salary scale) can be members of the Union. The Union leader therefore tends to be uneducated. But they must be invited to big meetings with management to make deals. Often in those meetings the educated management may say somethings that the uneducated Union do not understand and the management members may even make fun of the Union
leader for not understanding those facts. This will make that Union leader angry and go back to the workers to demand even more financial benefits than before [8,22] often enough to destroy the profit making capability of the factory which is why it exist in the first place.

The most infamous mistakes in high-tech product manufacturing is that of Eastman Kodak or just Kodak. In their peak year of 1996, they had 75% of the world’s market share for films. Kodak’s revenue in 1996 was $16 billion and had 145,000 employees. The stock price was $90 and the valuation of the company was $16 billion [23]. That is more than many big countries. Comparatively a few years earlier in June 1991, India was in crisis and had only $500 million in reserves [24].

Kodak engineers invented the digital camera. Cameras prior to digital ones used a shutter to open and close making the actual pixel of the picture very huge compared to digital cameras. Managers and engineers of Kodak and Fuji and few others are probably the only ones who know the number of pixels in a picture.All others just want to see a picture and appreciate it. The management of Kodak commented to the inventor of the digital camera that the customers who are used to the high-end pictures of celluloids will never accept the much lower quality digital camera pictures which have very much lower pixel numbers. But the number of customers worldwide who can differentiate a very high pixel picture from a simple one are very few. And those few will not affect market share. But it is hard to recommend a change from celluloids to digital camera technology to a management that is controlling such a huge financial empire. Today in 2021 Kodak has only 5000 staff and a revenue of just over $1 billion [25,26]. A lesson to learn from this is that companies should target the average to lower income of the earth’s population and not the rich. In all countries it is this group of people who purchase most things. A similar thing happened to digitized songs. The old LP stored close to 100% of the original song but the CDs only stored a sample (according to sampling rate) of the song but it is acceptable by the average to lower income group of humanity. That is, most of humanity was willing to purchase the lower quality song on CDs at the much lower prices.

How The HHD Work

The HDD has concentric circles of tracks from the ID to the OD. It is on the tracks that magnets form the 1 and O to store data. The R/W head flies over the platters, on each track, with aircraft technology. The fly height is 0.5 nm. It is not possible to suspend the head at that height. The flying requires wings to get it up and spoilers to keep it down. As the fly height decreases the data density on the disk increases. This is like switching on a torch light and shining it on a table. As it is held high, the lighted up circle is big and as it is lowered, the circle decreases in size. The diameter of the circle is equivalent to one bit of data. A N-N junction of magnets is a 1, a S-S junction of magnets is also a 1. A N-S junction is a 0. The ASCII table is used to translate which combination of 1 and 0 are which number, character or instruction [27].

The head flies over a layer of air so there is a filter that lets in air.The latest trend is to hermetically seal the HDD with He within it. This is advantageous because He is 1/7 the density of air, thereby bringing down the pressure by 1/7. Also using the Ideal Gas law:

as P goes down the temperature (T) goes down making the helium filled HDD 5^oC cooler. He also enables less wind turbulence. Overall, He enables a 40% increase in data capacity. Also, dusts cannot enter anymore [8,27,28].

Improvements to the Factory

The first suggested improvement is to place a disk handling robot in between all machines. With this, if a researcher wants to make a small change, the operator need not stack up the disks in a cart which will introduce human handling defects on the disks. A robot will stack up the disks on the carts [8]. 

The second improvement is the fact that workers are normally operating blind today. It is good to give them all the information from supply of materials to customer demand in real time. This will enable them to trace sources of defects in the production [8]. 

The third improvement is to extend Dell’s idea of customers ordering a computer and paying for it online and only after that the production starts. This way every disk produced in the Kuching factory is already paid for. Currently production levels are estimated and sometimes wrong estimates have caused even 100,000 to 200,000 disks to be scrapped due to over production [8].

A fourth improvement is to stop the flushing of the chemical carrying pipes. Flushing means pumping the pipes with H₂O₂ for up to two hours to clean it. That downtime cost a lot of money in terms of opportunity cost. After the flushing, there tends to be a yield drop because the coagulated chemical which is like cholesterol in human blood vessels getting dislodged. When the factory was Komag, a sister factory in Japan did not do any flushing. After some time, they just changed the chemical pipes [8]. 

A fifth improvement is to improve the chemical flow rate measurement. Flow rate is measured by a stainless-steel ball in a pipe with scales upon it. Another current method is to use a propeller with a magnet attached to it. As the propeller turns the magnet is detected to determine the flow rate. But the chemicals in the Kuching factory have moved from close to pH7 in 1995 to pH1 or pH14. At such pH, both flow rate measurement methods above are not possible because they will be too corrosive. Companies such as Keyence have developed ultrasonic sensors that are attached outside pipes. The difference in the sent and received ultrasonic signal is calibrated to the flow rate of the chemical [28]. This will enable flow rate sensor installation without any cuts to the pipes which will contaminate the chemicals whose purity has increased as the HDD capacity has increased. 

A sixth improvement is to split up the Plating Department machines.It is currently the only one of the three departments which is fully automated. As mentioned previously full automation is a bad idea for high-tech manufacturing due to inability to try out new research ideas [8].

This paper studies the Kuching WD factory as a case study in the management of a high-tech product producing factory. It is useful for anyone who intends to manage a high-tech factory which is quite different from making a product that doesn’t change like canned food production. High-tech factories fail mainly due to critical wrong decisions and are analogous to winning or losing big battles during WW2. This paper has shown that full automation which is a trend in most factories is not conducive for a high-tech factory. High-tech factories must be modular in operation. Modular operation will enable research as well as maintenance; imagine shutting down 50 machines just to repair one machine in the line. Managers may argue that is alright to keep one line modular and automate all the rest. But even this is not a good idea because research need samples running concurrently and this is best done with multiple production lines. Six improvements were suggested for the Kuching WD factory.

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