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Western Digital Keeps Biggest Disk Drive Maker Title

Irvine-based Western Digital Corp. held on to its title as the world’s largest drive maker in terms of units sold and overall revenue in the March quarter, narrowly beating Cupertino rival Seagate Technology Inc.

It’s the fourth straight quarter Western Digital has beaten Seagate on both marks.

Western Digital sold 60.2 million drive units, generating $3.8 billion. Seagate sold 56 million units, with sales of $3.5 billion.

The companies accounted for about 85% market share combined. Japan-based Toshiba Corp. is the other major player in the segment.

Rising demand among corporate customers, and last year’s $4.3 billion buy of San Jose-based Hitachi Global Storage Technologies Ltd., has created some space between Western Digital and Seagate, which had long held the revenue title.

“We suspect [Western Digital] will see further upside from enterprise share gains and benefit from cost takeouts,” RBC Capital Markets analyst Amit Daryanani wrote in a note to investors.

The Toronto-based investment bank maintained its outperform rating and raised its target from $55 to $60.

Both companies’ disk drives go into computers, external storage devices, corporate networks and consumer electronics.

Western Digital was pegged to surpass Seagate after its record deal for Hitachi was announced in March 2011.

Then, in October 2011, severe floods hit Thailand, where the company manufactures some 60% of its drives, forcing Western Digital to close its two main factories there for months.

It disclosed in a recent regulatory filing that the recovery will cost an additional $200 million this fiscal year, which ends in June.

The setback caused Seagate to overtake Western Digital in unit sales in late 2011, ending its rival’s long-held reign.

It took a year to close the Hitachi deal as Western Digital wrangled with U.S. and international regulators over antitrust concerns. The company had to agree to a series of conditions to gain approval from the European Union, including selling its business of 3.5-inch hard disk drives, a production plant and related assets.

It appears Western Digital has closed a long chapter in its bid to overtake Seagate and entered a new one as the undisputed industry leader.

The company projects revenue in the current quarter between $3.55 billion and $3.65 billion, in line with Wall Street expectations. Adjusted profits are pegged at $382.4 million to $430.2 million, the latter figure at analysts’ consensus.

Seagate projects sales of between $3.3 billion and $3.45 billion, in line with Wall Street estimates.

The company didn’t provide a profit target in its recent quarterly report.

Microsemi Contracts With Intel

Aliso Viejo-based chipmaker Microsemi Corp. has contracted with Intel Corp. to produce 22 nanometer chips at Intel’s foundry in Hillsboro, Ore.

The deal, signed in January, will help Microsemi develop systems-on-a-chip for high-performance computing and advanced digital integrated circuits, network acceleration, and signal-processing applications, which bring higher margins and tough barriers to entry.

Microsemi is designing products with customers and expects to start shipping chips in late 2014 or early 2015, the company told the Business Journal.

The customers in the communications and defense sector weren’t disclosed.

The contract with Santa Clara-based Intel, the world’s largest chipmaker, follows similar deals Microsemi has had with Milpitas-based Global Foundries Inc., United Microelectronics Corp. in Taiwan, and MagnaChip Semiconductor Corp. in Seoul, all of which handle the bulk of foundry manufacturing in the world.

Microsemi is Orange County’s second-largest chipmaker and passed the $1 billion mark in revenue last year. Its customers include Cisco Systems Inc., Dell Inc., Samsung Electronics Co. and others.

Multi-Fineline Inventory Cuts

Anaheim-based circuit board maker Multi-Fineline Electronix Inc. made some strides in reducing inventory by $50 million in the last quarter but still charged off nearly $11 million due to “unusable components” and “uncertainty” in near-term demand.

The company has taken a hit on Wall Street after disclosing scaled-back production earlier this year, further fueling analyst concerns over supply-chain order cuts from Apple Inc., believed to be MFlex’s largest customer.

MFlex shares were down nearly 38% in the past 12 months and 25% from the beginning of the year to a recent market value of about $365.2 million.

MFlex makes circuit boards used in cellphones, smartphones and other mobile devices. The boards are flexible, which makes them easier to design into phones, bar code scanners and other devices.

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