Western Digital and IBM Enter into Letter of Intent for Hard Disk Drive Component Supply and Technology Licensing

Relationship is intended to combine IBM's industry-leading GMR products and R&D resources with WD's high-volume hard disk drive expertise

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SAN JOSE, Calif - 04 May 1998: ....Western Digital and IBM announced today plans to enter into a broad-based hard disk drive component supply and technology licensing agreement.

The anticipated agreement would include a wide range of options involving the design and manufacture of desktop hard disk drives. IBM intends to supply Western Digital with its leading areal-density giant magnetoresistive (GMR) heads and other components for WD's manufacture of desktop hard disk drives. At the outset, Western Digital would use IBM technology and designs to integrate simultaneously IBM's GMR heads and other components into WD's future hard disk drives.

Western Digital expects to introduce desktop hard disk drives based on IBM products and designs in the first half of calendar 1999. Financial terms of the letter of intent will not be disclosed. Terms of the relationship will become effective upon completion of a definitive agreement.

Chuck Haggerty, chairman, president and chief executive officer of Western Digital stated: "Western Digital plans to engage in an outstanding long-term relationship with IBM and its unrivaled R&D resources -- an ideal alignment as we address the tremendous opportunities and technical challenges in the data storage industry. The strategic relationship is planned to leverage WD's high-volume manufacturing and design efficiency, its customer relationships and market savvy in the challenging desktop hard disk drive business."

Jim Vanderslice, vice president and group executive, Data Technology Group, IBM, said: "We're very pleased about expanding our current relationship with Western Digital. This is a stellar endorsement of IBM disk drive components, particularly our industry-leading GMR head technology. Since we began our OEM head program two years ago, it has become a major engine of growth within IBM. The extension of this relationship with Western Digital is a testimony to the competitive advantages that can be realized using IBM head technology for high- volume desktop disk drives."

Kathy Braun, president and chief operating officer of Western Digital's Personal Storage Division, added: "We're very excited about the prospect of teaming with IBM in a long-term relationship and look forward to delivering an unparalleled roadmap of products to WD's desktop customers, incorporating IBM's leading GMR head technology. Access to their technology will enable our people to leverage a broadened base of resources to address a variety of customer needs more effectively."

Western Digital Corporation is a leader in information storage products and services. The company designs and manufactures hard drives for personal and enterprise-wide computing, and markets them to leading systems manufacturers and selected resellers under the Western Digital brand name. Western Digital is the first Fortune 500, multinational company to have been awarded company-wide ISO 9001 registration, linking all WD organizations with a consistent global standard for quality processes. The company was founded in 1970 and has long been noted for its storage and end-market systems-level design knowledge. The company's World Wide Web home page can be found at http://www.westerndigital.com.

IBM Storage Systems Division (SSD) offers customers worldwide a comprehensive range of industry-leading software and hardware storage products. These are offered through IBM, as well as a large network of IBM Business Partners and Original Equipment Manufacturers (OEMs). Headquartered in San Jose, Calif., the division has worldwide responsibility for the development, manufacturing, marketing and field support for its storage products. IBM SSD is a division of IBM Corporation headquartered in Armonk, NY.

For more information about IBM storage solutions, go to the World Wide Web at http://www.ibm.com/storage.

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IBM is a registered trademark of International Business Machines Corporation. All other trademarks are property of their respective owners.

This release contains forward-looking statements based on current management expectations, including statements related to the proposed broad-based hard disk drive component supply and technology licensing agreement with IBM, the range of options to be included in the agreement, the introduction of desktop hard drives based on the technology transferred pursuant to the agreement, future opportunities and challenges in the data storage industry, the competitive advantages of IBM technology and the effect of the agreement on Western Digital's future products and technology. Actual results may differ materially as a result of several factors, including: when and if a definitive agreement is entered into; successful transfer of the technology pursuant to the agreement and successful incorporation of such technology in Western Digital's future products; future technology developments and other competitive factors in the hard drive industry; business conditions and growth in the personal computing industry; and other factors discussed in Western Digital's form 10-K for the year ended June 28, 1997, its recent form 10-Qs, and its other SEC filings. Neither Western Digital nor IBM undertakes any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.

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