Hard drive manufacturer Seagate Technology (NASDAQ: STX) is shuttering its factory in Suzhou, China, Reuters reports. The closing will affect 2,127 employees at the facility, who will be released by the company.
Seagate has not yet released a formal public statement on the move, although Reuters did quote the company as expressing its "regret" about the closure.
The news did not come as a great surprise, as Seagate announced last summer that it would lay off around 6,500 workers as part of a global restructuring. At the time, that was around 14% of its worldwide workforce. In announcing the plan, the company wrote that it was aimed at the "continued consolidation of its global footprint across Asia, [Europe, Middle East, and Africa] and the Americas."
Seagate added that it expected to book pre-tax charges of around $164 million in its 2017 fiscal year for these restructuring efforts.
The company opened its Suzhou plant, one of two factories it operates in China, in 2004. (The other, located in Wuxi, commenced operations in 1995.) Suzhou is the larger of the pair, at roughly 107,000 square meters (1,152,000 square feet). Various hard drive products are manufactured at the facility.
Although hard drive technology has been more durably popular than many industry watchers expected, it is still considered to be approaching obsolescence. Both Seagate and fellow hard drive maker Western Digital (NASDAQ: WDC) have lately struggled with revenue and profitability erosion. In order to help rectify this, Western Digital last year sewed up its roughly $17 billion acquisition of solid-state drive maker SanDisk, giving it a large asset in that product category.
Although Seagate has its own slate of SSD offerings, its portfolio isn't as strong as the one acquired by Western Digital. Partly as a result, over the past year Western Digital's stock price growth has eclipsed that of its rival, rising by 29% compared to Seagate's 13%.
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Eric Volkman owns shares of Western Digital.