Increasing demand meant Toshiba either needed to build a new manufacturing line or look to a third party to make additional drives.
The Matsushita division will manufacture 1.8-inch and 2.5-inch drives for Toshiba at its Indonesian subsidiary starting from April, and Toshiba will continue to produce drives at its own factories.
Toshiba would not detail drive capacity or the extra capacity that Matsushita will provide, although it is aiming for a monthly production of 300,000 units of 1.8-inch hard disk drives for 2003.
Small form factor hard disk drives are, increasingly, being used in consumer electronics products such as video recorders, digital music players and car navigation systems. The worldwide market for such drives jumped to 35 million in 2002 from 29 million a year earlier and is forecast to hit 43 million in 2003, according Toshiba figures.
Both Toshiba and Matsushita will work together to improve the design of its small form factors in the future.