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Exhibit 10.3
 
  
 SUBSTRATE PRODUCT SUPPLY AGREEMENT
  Seagate
Technology International
 Signature:
    
    4/s/ David A. WickershamPrint Name:
    
    David A. WickershamTitle:
    
    President and Chief Operating
OfficerDate:
    
    February 23, 2007Address for Notices
    
    Attn: Corporate Contractsto Seagate:
    
    Mailstop SV15A2c/o Seagate Technology LLC920 Disc DriveScotts Valley, CA 95066USAPhone No.:
    
    831-439-7646Fax No.
    
    831-438-7132Effective Date:
    
    January 1, 2007Expiration Date:
    
    December 31, 2008Agreement No.:
    
    53663
 Komag USA Malaysia Sdn.
 Signature:
    
    4/s/ Oung Kheng HuatPrint Name:
    
    Oung Kheng HuatTitle:
    
    Vice President & Managing DirectorDate:
    
    February 23, 2007Address for Notices
    
    Attn: Vice President &
Managing Directorto Supplier:
    
    Komag USA Malaysia Sdn.Bayan Lepas Free Industrial ZonePhase III11900 PenangMalaysiaPhone No.:
    
    (604) 6439-449Fax No.
    
    (604) 8506-125
 Komag, Incorporated
 Signature:
    
    4/s/ Tim HarrisPrint Name:
    
    Tim HarrisTitle:
    
    Chief Executive OfficerDate:
    
    February 23, 2007Address for Notices
    
    Komag, Incorporatedto Supplier:
    
    1710 Automation ParkwaySan Jose, CA 95131Attn: Chief Financial OfficerPhone No.:
    
    (408) 576-2000Fax No.
    
    (408) 944-9234
 -1-




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1. PRODUCT ORDERS
 Product and Price List Exhibit A
 Orders
 Order Acceptance
 This Agreement Controls
 Affiliated Purchasers
 Contract Manufacturers
 Right to Incorporate and Resell
 2. PRICING
  Cost Reductions
 Audit
 3. SHIPMENT AND DELIVERY
 Incoterms. Exhibit A
 -2-




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Incoterms 2000
  Supplier Managed Inventory
 Import and Export Formalities Exhibit B.
 On-Time Delivery
 Packaging and Marking
 Electronic Delivery
 Product Acceptance
 4. INVOICING AND PAYMENT
 Invoices and Payment Terms
 -3-




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Right to Offset
 5. PRODUCT SPECIFICATIONS AND CHANGES
 Product Specifications. Exhibit C
 Specification Changes
 Product Information
     Seagate Property
 6. FORECASTS, CAPACITY PLANNING, AND FLEXIBILITY
 Forecasts
 Capacity Planning
 End-of-Life Capacity
 -4-




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Downside Flexibility.
   7. PRODUCT WARRANTY
 Warranty Period Exhibit A
 Warranties Terms
       Additional Warranties.
    -5-




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Warranty Remedies
     Remedies Nonexclusive
 8. RELIANCE ON SUPPLIER
 Advice Regarding Intended Use.
 Return of Product
 -6-




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Limits on Reliance
 9. ONGOING QUALITY AND RELIABILITY
 Quality Standards Exhibit D.
 10. CONTINUITY OF SUPPLY
 Allocation of Resources
 Advisory Personnel
 March-In Rights
 Manufacturing Rights
 11. CONFIDENTIALITY
 Marking Confidential Information
 Nondisclosure
 Confidentiality Period
 -7-




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Exclusions
 Return of Information
 Other Nondisclosure Agreements
 Publicity
 12. INDEMNIFICATION AND DEFENSE
 General Indemnification
 Infringement Indemnification
 Notification and Defense Obligations
 -8-




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13. LIMITATION OF LIABILITY
 Limitation of Type of Liability
 Limitation of Amount of Liability.
 14. TERM AND TERMINATION
 Effective Date and Expiration Date.
 Renewal
 Termination for Convenience .
 Termination for Cause
 Effect of Termination or Expiration
 15. DISPUTE RESOLUTION
 Good-Faith Negotiation.
 Mediation
 Arbitration www.jamsadr.com/rules/international_arbitration_rules.asp
 -9-




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Equitable Relief
 Survival and Attorneys Fees
 16. INSURANCE
 General Insurance Requirements
 Workers Compensation and Employers Liability Insurance
 Commercial General Liability Insurance
 Automobile Liability Insurance
 Errors and Omissions (Professional Indemnity) Insurance.
 -10-




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Proof of Insurance.
 Waiver of Subrogation
 17. MISCELLANEOUS
 Relationship of the Parties
 No Intellectual Property Rights Granted
 Assignment
 Compliance with all Laws
 Manufacturing Process Inspections
 -11-




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Export Controls
 English Language; Governing Law
 17.8. Continued Provision of Service
 Written Disaster Recovery Plan
 Force Majeure.
 Severability; Survival
 Written Amendments; Electronic Business Transactions
 Entire Agreement; No Waiver; Notices
 Headings
 Counterparts
 -12-




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EXHIBIT A
PRODUCT AND PRICE LIST
 a.
    
    Volume. Komag will supply and Seagate will purchase,
provided Product meets Seagates specifications, pricing and quality targets,
up to the following total volume of nickel plated and polished substrates
(NPP) Product during the term of this Agreement:
 Q1 07
    
    [****] piecesQ2 07
    
    [****] piecesQ3 07 and for the remaining term of the Agreement [****] pieces per
quarter.
 b.
    
    Volume Adjustments. Komag will make available to
Seagate, up to a total of [****] pieces in Q1 07 and up to [****] pieces in Q2
07. [****].c.
    
    Pricing. The following Komag prices are considered
[****] commitments and are based on Seagate fiscal calendar consumption. All
prices are [****], as defined in International Chamber of Commerce Incoterms
2000,and both parties mutually agreed freight forwarder subcontractors.
 i.
    
    The price for [****] is [****].ii.
    
    The price for [****] is [****].iii.
    
    The price for [****] will be based on the
following:
 1.
    
    For [****] pieces a quarter: the
price will be [****].2.
    
    For [****] pieces a quarter: the
price will be [****]; and3.
    
    For [****] pieces or more a
quarter: [****].
 iv.
    
    The price for [****] will be based on the
following:
 1.
    
    [****].2.
    
    [****].3.
    
    Pricing based on [****] price
schedule.
 d.
    
    [****] Flexibility. The parties agree on the following
[****] flexibility:
 i.
    
    [****].ii.
    
    [****].iii.
    
    [****].iv.
    
    [****].v.
    
    Komag will make reasonable effort to meet
[****] supply requests and at a minimum provide the following [****]
production for Seagate products:
 1.
    
    From 1/1/07 to 7/1/07: [****].2.
    
    From 7/1/07 to 12/31/07: [****].3.
    
    From 1/1/08 to the end of the
agreement: [****].
 vi.
    
    Komag will make reasonable effort to respond
with shipments to meet all Seagate product schedules and purchase
order changes. Komag lead time for shipment to meet Seagate schedules
and purchase order changes will not exceed [****] upon Aluminum Blank
supply availability.
 -13-




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EXHIBIT B
CUSTOMS CLEARANCE DOCUMENTATION
   1. SHIPPING INFORMATION
 §
    
    Date of shipment;§
    
    Invoice number and shipment number;§
    
    Seagate purchase order number;§
    
    Shipper name and address;§
    
    Ship to party (name and address) and bill to party (name and address);§
    
    Supplier Custom Broker (name);§
    
    Wood packaging material adherence with ISPM15 ( International Standard for Phytosanitary
Measures No. 15) (i.e., must be either heat treated or fumigated with methyl bromide and
marked with an approved international mark certifying treatment);§
    
    Name, contact information and signature of responsible individual  must be a
responsible employee of the exporter who has knowledge or who can readily obtain knowledge
of the transaction;§
    
    Incoterm and named place; and§
    
    Shipment gross weight.
 2. PRODUCT INFORMATION
 §
    
    Description of Product, grade or quality, as well as marks, numbers, and symbols under
which the Product is sold, if applicable  for product description, use generic terms by
which each item is commonly known.§
    
    Product quantities, including quantity of Product per each individual package/box, the
number of packages/boxes, the number per pallet, the number of pallets, and the
corresponding weights  the information must be sufficiently detailed to enable
identification and matching of Product in the shipment against line items on the shipping
invoice;§
    
    Seagate part numbers
 -14-




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§
    
    Seagate Descriptions as indicated in P.O.§
    
    Quantities§
    
    Unit of Measurement§
    
    Country of origin (place of manufacture) by part and quantity§
    
    FCC ID number, if any§
    
    FDA accession number, if any; if the invoice contains multiple pages, each page must be
number, preferably in the following format: X of Y pages§
    
    Product net metric weight§
    
    Manufacturers Identification code/MID number (for textile products shipped to the U.S.)§
    
    Third Party product appraisal report on used equipment (if applicable)§
    
    Product classification information including:
 o
    
    Harmonized Tariff Schedule numbero
    
    Export Control Classification Number (ECCN)
 §
    
    U.S. Commodity Classification Automated Tracking System number (CCATS number, if
applicable)§
    
    U.S. export license number and expiration date (if applicable)§
    
    U.S. License Exception designator (if applicable)
 3. PRICING INFORMATION
 §
    
    Unit purchase price and type of currency (if the merchandise is not purchased, the value
or usual price in the country or exportation);§
    
    All charges upon the Product, itemized by name and amount, including freight, insurance,
commission, cases, containers, coverings and cost of packing, repair and calibration;§
    
    Total purchase price and terms of payment  customs regulations require every shipping
invoice accurately reflect the price to be paid by Seagate. The shipping invoices are used
to declare the value of the imported Product for customs entry. Software purchases must
indicate the full purchase price of the software regardless of delivery method, e.g.
CD-ROM, download. Accordingly, 100% accuracy is required. Post-shipment price increases
can render declarations inaccurate; therefore, price increases may not be applied to
Product already shipped or in JIT or VMI inventories;§
    
    All free of charge items must have a commercial value listed for Customs purposes.
  4. GLOBAL SUPPLY CHAIN SECURITY PROGRAMS
  -15-
      
   -16-




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EXHIBIT C  PRODUCT DESCRIPTION AND SPECIFICATIONS INCORPORATED BY REFERENCE
 Form
    
    
    
    
    
    
    
    DocumentFactor
    
    Platform
    
    Product
    
    Document Title/Description/Part No.
    
    Number
    
    Rev[****]
    
    [****]
    
    [****]
    
    [****]
    
    [****]
    
    
    [****]
 -17-




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EXHIBIT D
QUALITY STANDARDS
 Commitment to Seagates Quality Requirement
 1. Yield Benchmark. .
 2. Product Stewardship Requirements Exhibit C
 3. ISO 9000 Certification
 4. Corrective Action
 5. Epidemic Failure; Product Recall
 6. Failure Rate
 -18-




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Early Failure Rate Defective Parts Per Million (DPPM)
 Defective Parts Per Million (DPPM)
  7. Quality Standard
 Exhibit C
      -19-




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EXHIBIT E
BUSINESS CONTINUITY AND
EMERGENCY RESPONSE PLAN; DISASTER RECOVERY PLAN
 A. GENERAL
    B. COMPLIANCE WITH LAW
    C. PROHIBITIONS FOR ALL FACILITIES USED TO STORE SEAGATE WIP AND FINISHED GOODS
     -20-




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D. REPORTING OF DISRUPTION OF PRODUCT SUPPLY
  E. DISASTER RECOVERY PLAN
  General
  Requirements
      -21-