Western Digital Agrees to Sell PC Equipment in Bulgaria

Hoping to benefit from improved superpower relations, Western Digital of Irvine has reached a preliminary agreement to sell personal-computer data storage devices to a Bulgarian company.

The deal--believed to be one of the first of its kind involving high-technology companies in the United States and Bulgaria--is subject to approval by the U.S. government.

Under the agreement, Economic Organization Disk Drive Memories, a large Bulgarian manufacturing firm, would create a trading company to distribute Western Digital hard disk drives and computer memory boards in Bulgaria.

The Bulgarian manufacturer has also agreed to an initial purchase of $1.3 million of Western Digital drives and memory boards, which the Bulgarian company will use to manufacture computers and related products.

A hard disk drive is a computer memory device used to store and retrieve data. It is permanently mounted in a personal computer.

Western Digital said it is considering buying disk drive motors from the Bulgarian firm to be installed in drive units manufactured at the Irvine firm’s plant in Singapore.

The two companies are also discussing the possibility of setting up a joint venture in Bulgaria to manufacture Western Digital products.

The Bulgarian firm, with 25 manufacturing facilities and more than 15,000 employees, claims to produce 85% of all disk drives made for computers in the Soviet Union and other Eastern European nations.

Western Digital officials said they hope the deal will lead to future business in Bulgaria and other Eastern European nations as those countries seek to expand the use of personal computers.

“We believe there will be a huge requirement for personal computer technology in the Soviet Union and other Eastern Bloc nations during the next several years if American companies are allowed to sell to them,” said Greg Peel, Western Digital’s vice president of international operations.

The deal must be approved by the U.S. Commerce Department and COCOM, a Paris-based organization created by Western nations to oversee exports to the Soviet Bloc. U.S. law prohibits the export of items with possible military applications to Eastern Bloc nations. Other high-technology goods may be shipped to those nations only with approval of COCOM.

The hard disk drives that Western Digital wants to sell to Bulgaria incorporate technology that is about 5 years old. The same kind of drives are used in IBM XT-model personal computers and similar machines made by other manufacturers, company officials said.

“We believe it will be possible to get an export license,” Peel said. “These are small disk drives that anybody could go out and buy. They (the Bulgarian firm) are making disk drives of the same capacity. It’s just that their drives are probably fairly old technology and are expensive to manufacture.”

Mike Likala, director of the U.S. Commerce Department’s Bureau of Export Administration office in Newport Beach, said a bulk sale of hard disk drives to Bulgaria “would be very carefully reviewed” by the agency.

Western Digital and other high-technology companies have become increasingly interested in cracking the Eastern European market as a result of continuing improvements in U.S.-Soviet relations, trade officials said.

“We’ve had a lot of inquiries,” said Likala, the Commerce official. “But most of these deals won’t come to much because the Soviets don’t have the hard currency to substantially increase imports.”

The Orange County technology company first learned about the Bulgarian firm through a Western Digital engineer named Bogdan (Bob) Nenov, an emigre from Bulgaria. Nenov has a brother who works for a trading company in Bulgaria and was aware of the Bulgarian company’s interest in acquiring disk drives, Peel said.

In May, Western Digital signed a $3-million deal to sell computer memory boards and chips to a computer company in China--its first major sale to a Communist country. The U.S. government has not yet approved the deal.