Fujitsu puts 1.8-inch hard drive plans on hold

TOKYO, April 9 (Reuters) - Fujitsu Ltd. (6702.T) said on Monday it has halted plans to make 1.8-inch hard drives as handheld device makers are more interested in flash drives for storage.

The Japanese chips-to-computers conglomerate had initially planned to begin production of 1.8-inch hard drives, used in ultra-portable notebooks and digital media players like Apple Inc.'s (AAPL.O) iPod, in the first half of the current business year that began April 1.

But makers are now looking at flash memory drives as a lighter and faster - albeit more expensive - alternative to hard drives, which come with lengthy start-up times.

"We want to see if the market tips toward flash, or if it stays with hard drives," said Fujitsu spokesman Masao Sakamoto.

Falling prices for 2.5-inch hard drives have hurt profit margins at Fujitsu, which competes against industry leader Seagate Technology STX.N and Western Digital Corp. (WDC.N).

Makers of smaller 1.8-inch hard drives include rivals like Toshiba Corp. (6502.T) and Samsung Electronics Co. Ltd. (005930.KS).

Fujitsu shares inched up 0.4 percent to 830 yen in morning trade, underperforming Tokyo's electrical machinery subindex .IELEC.T, which rose 1.25 percent.

((Reporting by Mayumi Negishi; editing by Sophie Hardach; Reuters Messaging: mayumi.negishi.reuters.com@reuters.net; +81-3-3432-8618; mayumi.negishi@reuters.com)) Keywords: FUJITSU HDD/

(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nT272724