US-based Hutchinson Technology Inc (HTI), one of the world's top three suppliers of hard disk parts, is investing 4.3 billion baht in Thailand to open its first manufacturing centre outside the United States.

Ms Skarvan anoints the foundation stone at a ceremony marking the beginning of the factory's construction yesterday.

Kathleen Skarvan, president of HTI's disk drive components division, said the company chose Thailand to stay closer to the company's clients.

Headquartered in Minnesota, Hutchinson joins NHK and Magnecomp, the two other leading suspension producers that have plants in Thailand.

Construction is scheduled to be completed in August, and Hutchinson Technology (Thailand) wants to start production before the end of this year, Ms Skarvan said.

Thailand provides a favourable business climate and a skilled workforce, she added. By having a production facility locally, Hutchinson can improve speed of product delivery in the region.

According to the Board of Investment (BoI), Thailand's output of 350 million to 400 million units a year accounts for 40% of global hard disk drive (HDD) shipments, generating export revenue of 500 billion baht.

Demandis growing for hard disk drives made with parts produced by Hutchinson Technology. Asonline social networks expand, so does demand for data storage products.

Global HDD players Seagate Technology, Western Digital, Toshiba, and Hitachi Global Storage all have large production facilities in Thailand.

The entry of Hutchinson will complete the HDD manufacturing cluster in Thailand, said Ajarin Pattanapanchai, the BoI deputy secretary-general. She said Hutchinson's choice of Thailand for its first overseas production base proved that Thailand remained attractive as an investment location for international manufacturers.

The BoI granted investment promotions to Hutchinson last year for a maximum production capacity of 400 million units of suspension a year, Ms Ajarin added.

Ms Skarvan said the Thai unit would supply most of its output to HDD manufacturing customers in Thailand initially. Exports could begin in the next two years to China, Malaysia, the Philippines, Japan and Korea.

The Thai plant will be highly automated and employ only 250 high-quality local staff, mainly engineers. Initially, the company will import parts from the US but it has developed a network of parts suppliers in Thailand for local sourcing in the future, she added.

Hutchinson's investment in Thailand was suspended during the global economic recession. It revived the plan in August when demand in the data storage sector started to recover.

As online social networks such as Twitter and Facebook expand, there is a rising demand for data storage products as well as HDD parts such as suspensions, Ms Skarvan said.