Seagate is reportedly to close its factory in Suzhou, China, with the loss of 2,127 employees in the region, as the company faces an ongoing drop in mechanical hard drive sales.
The manufacturing facility in Suzhou, China, wasn't originally a Seagate facility: The company acquired it back in 2006 as part of its deal to buy Maxtor
. At the time, Seagate was the largest manufacturer of hard drives with Maxtor coming in third behind Western Digital. Since then, Seagate has continued to operate the plant in order to produce drives and devices under the Maxtor brand - primarily portable external hard drives - as well as to boost its own manufacturing capacity.
Unfortunately, that capacity appears to exist in excess beyond that supported by Seagate's customer base. The result: a brief report on newswire service Reuters
that Seagate is closing the former Maxtor plant, resulting in the laying off of 2,127 employees - a major blow for the region's economy.
The company has claimed that the plant's closure was planned back in July 2016 as part of an ongoing cost-reduction programme. In its last financial report for the first quarter of 2017, the company reported revenue of $2.797 billion, down from $2.925 billion in Q1 2016 and $3.785 billion in Q1 2015. The majority of this revenue came from the sale of traditional mechanical drives, with solid-state storage - a market Seagate entered late after executive mistrust of the technology incorrectly predicted its failure - representing less than 10 percent.