February 5, 1998 (MANILA) -- Disk drive maker Seagate Technology Inc. will complete construction of a US$70 million read-write head plant in the Philippines.

It is moving ahead despite the ongoing regional financial crisis that has caused international economists to downgrade their growth projections for Asian countries, particularly those in Southeast Asia.

Although the plant will be completed, Seagate said there are no definite plans for production yet.

"Constructing the plant will take a while. Depending on how the industry turns out, we'll make a decision then," said Teh Ban Seng, Seagate's manager for the South Asia Pacific region.

The US$70 million investment covers cost of the land and building the plant in the western Philippine province of Cebu, Teh said.

Seagate said construction of the plant in Cebu would be completed in the first half of 1998, as previously planned.

The read-write head plant is Seagate's first investment in the Philippines.

Although Seagate's plans for the Philippines remain unchanged, Teh said the company is stopping the production of disk drives in Thailand during the current quarter. Seagate will continue to make the various components it produces there, however.

In Asia, the company manufactures disk drives in Singapore, Malaysia and China.

Earlier in February, Seagate announced plans to cut a total of 10,000 jobs, or 10 percent of its global workforce, as part of its restructuring to improve efficiencies.

In Singapore, where Seagate makes its high-end disk drives, some 1,800 jobs have been cut in the last three months.

Another 750 jobs were cut in Malaysia, where Seagate said it would halt head stack and head gimbal assembly operations in its Penang and Ipoh facilities and reduce disk drive assembly operations in Perai by mid-February.

Job cuts in Thailand are expected in February, Seagate said.

For the second quarter ended Jan. 2, 1998, Seagate recorded a net loss of US$183 million, or US$0.75 per share, including a restructuring charge of US$205.5 million and other special charges.

Revenues in the quarter fell 30 percent to US$1.67 billion due mainly to increased competition resulting in significant price cuts and continuing weak demand for disk drives.

Philippine Trade and Industry Secretary Cesar Bautista said the government remains optimistic that companies engaged in information technology, electronics, telecommunications and other related industries will continue to find the Philippines an attractive investment site despite the regional currency crisis.

He noted that international economists and even multilateral lending institutions such as the International Monetary Fund have acknowledged the fact that the Philippines isn't in as bad a situation as the other Southeast Asian countries grappling with the six-month-old regional currency crisis, particularly Thailand and Indonesia.

(Margarita Roa, Asia BizTech Correspondent)