Xyratex Targets Japanese Storage Market by Acquiring Jastam

Xyratex Ltd. (Nasdaq: XRTX), a leading provider of enterprise class data storage subsystems and storage process technology, today announced the establishment of Nihon Xyratex KK (Xyratex Japan, Ltd.). The company’s new Japanese headquarters, Xyratex Japan, Ltd. will be founded through Xyratex’s acquisition of Jastam Trading Co. Ltd. of Tokyo, Japan, a full service broker for equipment suppliers to high technology customers. The acquisition is an all-cash transaction of approximately $1.5M, representing the Net Tangible Asset value of Jastam. On a stand alone basis the acquisition would provide approximately $1.5M revenue per quarter and be EPS neutral. The formation of Xyratex Japan, Ltd. supports Xyratex’s strategy to expand its storage infrastructure and storage and network systems portfolio of solutions into the Asia-Pacific market. Xyratex will retain the expertise of industry veteran and former Jastam president and founder, Tamio Mori, to serve as general manager for Xyratex Japan, Ltd.

The Japanese market is a driving force in the storage infrastructure industry, producing approximately 30 percent of hard disk drive (HDD) units, 50 percent of media units, 57 percent of substrate units and 55 percent of head units, worldwide. Consumer electronics, which is the fastest growing drive category for the HDD market, is also dominated by Japan-based HDD suppliers.(1) Xyratex will combine its industry-leading expertise in high-volume disk drive test, servo writing and automated media cleaning, test and handling technologies with Jastam’s extensive experience as a regionally-based trading company to better serve organizations seeking before and after market support services in the Asia-Pacific region.

Xyratex Japan, Ltd. will also provide sales and support for Xyratex’s storage and network systems portfolio of data storage and RAID subsystems. Satoru Doi, director of sales and marketing, will lead Xyratex’s Storage and Network Systems division in Japan, building on the strong presence Xyratex has developed in the region. Current Japan-based customers include NEC Corporation, MIC Associates, Inc. and Thymos TechnoLogic Corporation. Xyratex products are also being used by various customers in the finance, multimedia, manufacturing and government sectors.

“The establishment of Xyratex Japan reinforces our position as a global leader and demonstrates our commitment to the Asia-Pacific market,” said Steve Barber, CEO of Xyratex. “By combining Jastam’s established foothold in the Asia-Pacific region with our operational resources, Xyratex is optimally positioned for rapid expansion in this strategic and growing market.”

“In addition to Jastam’s trading business with existing products, the new organization will provide Japanese HDD players with more constructive and attractive solutions to enhance production efficiency for media, head and HDD customers. Xyratex is a recognized global leader in storage infrastructure and represents an ideal solution provider for the Japanese market,” said Tamio Mori, general manager of Nihon Xyratex KK (Xyratex Japan, Ltd.). “Xyratex provides a perfect complement to Jastam solutions, giving customers a new level of service and support. With Xyratex’s global reach, we offer Japanese-based companies the opportunity to expand their markets and reach customers globally.”

Hitachi Start Evaluation Production Test Systems
Xyratex confirms that Hitachi GST has started its evaluation of an automated Production Test System. Xyratex has shipped and installed the evaluation unit at Hitachi’s Fujisawa, Japan facility. Xyratex automated production test systems are industry leading systems that are being successfully utilized by the major US based HDD manufacturers. These highly capable and flexible systems allow the HDD companies to respond rapidly to market demands, in addition to assuring a high level of quality for the shipped product.

Additional Information
Xyratex will provide more information on the acquisition when it announces its third quarter results on September 20th, 2006.

About Xyratex
Xyratex is a leading provider of enterprise data storage subsystems and storage process technology. The company designs and manufactures enabling technology that provides OEM and disk drive manufacturer customers with data storage products to support high-performance storage and data communication networks. Xyratex has over 20 years of experience in research and development relating to disk drives, storage systems and high-speed communication protocols. Founded in 1994 in an MBO from IBM, and with headquarters in the UK, Xyratex has an established global base with R&D and operational facilities in Europe, the United States and South East Asia.

(1) Trendfocus Q2’06 Update for HDD, Media, Head, and Substrate Sectors