<PAGE>

                                                                    Exhibit 10.3

[MAXTOR LOGO]                                                      BANK OF CHINA

                         FOREIGN EXCHANGE LOAN AGREEMENT
                             NO. YZDZ (2004) NO. 089

BORROWER: Maxtor Technology (Suzhou) Co. Ltd.

Enterprise legal person business licence number: Qi Du Su Zong Zi No. 021104

Legal representative: TEH KEE HONG

Financial institution name and account number: Bank of China Suzhou Industrial
Park Sub-branch

Account no.: US Dollar account no. 23865508091014

Address: No. 200, Su Hong Zhong Lu, Suzhou Industrial Park Export Processing
Zone

Contact method:   By Phone        65-68492828
                  By Fax          65-68492838
                  By Email        C_S_Tiong@maxtor.com

LENDER: Bank of China Suzhou Industrial Park Sub-branch

Legal representative or person in charge: Zhang Jia Wen

Address: No. 328, Dong Huan Road, Suzhou, the PRC, Post Code : 215021

Contact method:   By Phone        0512-672 64 268
                  By Fax          0512-672 69 297
                  By Email        zhangjw@.bocsip.com

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

A.    DEFINITIONS

In this Agreement:

"AVAILABILITY PERIOD" means a period of 12 months commencing on (and including)
the date of this Agreement;

"CAPITAL INJECTION SCHEDULE" means the injection schedule of the registered
capital of the Borrower set out in clause 10.2.13, as may be adjusted from time
to time by the Borrower under such clause;

"CAPITAL VERIFICATION REPORT" means each report prepared and issued by an
accountant qualified in the PRC appointed by the Borrower in relation to the
injection of the registered capital of the Borrower;

"LETTER OF GUARANTEE" means the letter of guarantee given by Maxtor
International Sarl to the Lender;

"COMMITMENT" means US$30,000,000(1), as may be adjusted, cancelled or utilized
in accordance with this Agreement;

"DRAWDOWN NOTICE" means the drawdown notice in the form set out in appendix A to
this Agreement;

"EBITDA" has the meaning given to such expression in clause 10.2.4(b);

"EVENT OF DEFAULT" means any one of the events specified in clause 11;

"FACILITY" means the loan facility in an aggregate amount equal to the
Commitment irrevocably made available by the Lender to the Borrower;

"FINAL MATURITY DATE" means 17 August 2009(2);

"GAAP" means the generally accepted accounting standards, principles and
practices in the PRC;

"GOVERNMENT AGENCY" means any government or any governmental agency,
semi-governmental or judicial entity or authority;

"GROUP" means Maxtor Corporation and its directly and indirectly owned
subsidiaries;

"INTEREST CALCULATION DATE" means, in relation to an Interest Period, one day
prior to the first day of that Interest Period;

----------------
(1)   complete as appropriate

(2)   complete as appropriate

<PAGE>

[MAXTOR LOGO]                                                     BANK OF CHINA

"INTEREST PAYMENT DATE" means each of the days which fall on (1)15 October
2004(3) and (2) each semi-annual anniversary after such date, provided that on
the relevant day any Loan is outstanding;

"INTEREST PERIOD" means any of those periods mentioned in clause 4.1 and any
other period by reference to which interest on a Loan or any unpaid sum is
calculated;

"LIBOR" means, in relation to any Loan or unpaid sum and any Interest Period
relating to it, the rate per annum equal to the arithmetic mean (rounded
upwards, if not already such a multiple, to the nearest whole multiple of
one-sixteenth of one per cent.) of the respective rates of each of the banks
whose rates appear on the screen page designated "LIBO" (or any equivalent
successor to such page) published or reported by Reuters Limited on the Reuters
monitor screen as the rate at which such banks are offering in the London
Inter-Bank Market deposits in US dollars for a period comparable to such
Interest Period at or about 11.00a.m. (London time) on the Interest Calculation
Date for such Interest Period, provided that where such Interest Period is 3
months or less, the comparable period shall be taken to be 3 months or, where
such Interest Period is greater than 3 months, the comparable period shall be 6
months;

"LOAN" means a loan made or to be made under the Facility or the principal
amount outstanding for the time being of that loan;

"LOAN RECEIPT" means a loan receipt in the form set out in appendix B;

"MARGIN" means 1% per annum;

"MATERIAL ADVERSE EFFECT" means a material adverse effect on the ability of the
Borrower to perform its payment obligations under this Agreement;

"PERMITTED DISPOSALS" means any sale, lease, licence, transfer or other disposal
of (1) products, inventory or other assets made in the ordinary course of trade
or business of the Borrower, including in the ordinary course of any business
permitted by law, (2) receivables by factoring or any other means of receivables
financing, (3) obsolete or worn-out assets, (4) land, plant, equipment or
machinery in exchange for other land, plant, equipment or machinery comparable
or superior in type, value or quality, (5) any machinery or equipment on arms
length terms for fair market value or (6) assets of a value not exceeding
US$5,000,000 by reference to their net book value, in any financial year or (7)
tangible or intangible assets under transactions between companies in the Group
pursuant to which the Borrower receives consideration equal to or greater than
the fair market value of the relevant assets at the time of such disposal;

"PERMITTED INDEBTEDNESS" means (1) financial indebtedness under the Loan
Documents, (2) any indebtedness or liability of the Borrower arising out of or
in connection with the ordinary course of trade or business of the Borrower,
including in the ordinary course of any business permitted by law, (3) any
indebtedness arising under any leasing or hire purchase arrangements, (4) any
financial arrangements undertaken for the purpose of hedging or managing foreign
currency exposure, interest rate fluctuations or other financial risks, (5) any
indebtedness of the Borrower not exceeding US$5,000,000 outstanding at any time,
or (6) any indebtedness owed to, or arising out of transactions involving, any
companies in the Group pursuant to which the Borrower acquires

-------------------
(3)   complete and delete as appropriate

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

any assets the fair market value of which is equal to or greater than such
indebtedness at the time of incurring such indebtedness;

"PERMITTED SECURITY" means (1) any security imposed by law or any security of
any nature arising out of or in connection with the ordinary course of trade or
business of the Borrower, including in the ordinary course of any business
permitted by law, (2) any security deposit provided to any Government Agency or
utility company in relation to the Project or the operation of the Borrower's
business, (3) any security of any nature securing liabilities not exceeding
US$5,000,000 outstanding at any time or (4) security of any nature arising out
of investments made in the PRC by the Borrower or transactions between or
involving domestic PRC companies in the Group;

"POTENTIAL EVENT OF DEFAULT" means any event which may become (with the passage
of time, the giving of notice, the satisfaction of any condition or any
combination of them) an Event of Default;

"PRC" means the People's Republic of China;

"PROJECT" means the establishment and operation of a hard disk drive
manufacturing plant at the Suzhou Industrial Park of the PRC by the Borrower;

"UTILIZATION DATE" means the date on which a Loan is, or is to be, made
available by the Lender to the Borrower.

B.    AIDS TO CONSTRUCTION

Save where the contrary is indicated, any reference in this Agreement to:

a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in the PRC
or, if such reference relates to the date for the payment or purchase of any sum
denominated in US dollars, New York, London and the PRC or, if such reference
relates to a day on which LIBOR is to be determined, London;

any DOCUMENT or AGREEMENT (including, without limitation, this Agreement) shall
be construed as a reference to such document or agreement as amended, novated,
supplemented, substituted, varied or replaced from time to time.

CLAUSE 1 CURRENCY AND AMOUNT

The currency of the Loan(s) shall be US dollars.

The total amount of the Loan(s) under this Agreement is (in words) thirty
million US dollars (in figure) US$30,000,000.(4)

CLAUSE 2 TERM

The term of each Loan commences on its Utilization Date and ends on the Final
Maturity Date.

-------------------
(4) complete as appropriate

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

CLAUSE 3 PURPOSES

The purposes of the Loan(s) under this Agreement are to provide finance to the
Borrower for project construction needs of Maxtor Technology (Suzhou) Co. Ltd.

The Borrower will not change the purposes of the Loan(s) without the consent of
the Lender.

CLAUSE 4 INTEREST RATE AND INTEREST

4.1   The first Interest Period of each Loan shall start on the Utilization Date
      for that Loan. The period for which a Loan is outstanding shall be divided
      into successive Interest Periods each of which (other than the first)
      shall start on the last day of the preceding Interest Period.

4.2   The duration of each Interest Period shall, save as otherwise provided in
      this Agreement, be six months, provided that:

      4.2.1 the first Interest Period for a Loan shall end on the immediately
            following Interest Payment Date for that Loan;

      4.2.2 any Interest Period which would otherwise end before, or extend
            beyond, the Final Maturity Date shall be of such duration that it
            shall end on that Repayment Date.

4.3   If two or more Interest Periods in respect of different Loans end at the
      same time then, the Borrower may make one single payment in respect of all
      interest due on such Loans on the relevant Interest Payment Date.

4.4   On each Interest Payment Date the Borrower shall pay accrued interest on
      the Loan(s).

4.5   Save as otherwise provided in this Agreement, the rate of interest
      applicable to each Loan from time to time during an Interest Period
      relating to that Loan shall be the rate per annum which is the sum of the
      Margin and LIBOR for such Interest Period.

4.6   The rate of interest applicable to any sum payable under this Agreement
      which the Borrower fails to pay when due in accordance with the terms of
      this Agreement shall be the rate per annum which is the sum from time to
      time of two per cent, (2%) per annum, the Margin and LIBOR for the
      relevant Interest Period.

4.7   The Lender will give notice to the Borrower if on the Interest Calculation
      Date for any Interest Period no banks have quotations of LIBOR appearing
      on the Reuters screen at the relevant time.

4.8   If a notice is given under clause 4.7 then within five days of such notice
      the Lender and the Borrower shall enter into amicable negotiations and
      friendly consultation with a view to agreeing a substitute basis (1) for
      determining the rates of interest from time to time applicable to the
      Loan(s) and/or (2) upon which the Loan(s) may be maintained (whether in US
      dollars or some other currency) and any such substitute basis that is
      agreed shall take effect in accordance with its terms and be binding on
      each party to this Agreement.

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

      Unless and until any substitute basis is agreed, the rate of interest
      applicable to the Loans shall be the rate equal to the interest rate which
      was determined in respect of the immediate preceding Interest Period. If
      no substitute basis is agreed, the Borrower shall be entitled to repay the
      Loan(s) and all interest accrued thereon to the Lender.

CLAUSE 5 DRAWDOWN CONDITIONS

The Borrower may utilize the Facility by way of a Loan in accordance with the
terms of this Agreement if:

5.1   Not less than 3 business days before the Utilization Date, the Borrower
      delivers to the Lender a Drawdown Notice duly completed and signed by the
      Borrower with its official chop impressed thereon;

5.2   the proposed Utilization Date is a business day which falls within the
      Availability Period;

5.3   the proposed amount of the Loan is a minimum of US$1,000,000 and a
      multiple of US$500,000 which is less than the Commitment;

5.4   no Event of Default or Potential Event of Default is continuing on the
      proposed Utilization Date; and

5.5   the representations set out in clause 10.1 (except clause 10.1.3) are true
      and accurate on and as of the proposed Utilization Date;

      and immediately upon the making of such Loan, the Commitment shall be
      reduced accordingly. The Commitment shall be reduced to zero at the end of
      the Availability Period or earlier if fully cancelled or utilized in
      accordance with the terms of this Agreement.

CLAUSE 6 TIME OF DRAWDOWN

The Utilization Date of each Loan is or is to be set out in the Drawdown Notice
for that Loan which has been or is to be delivered to the Lender by the
Borrower.

CLAUSE 7 DRAWDOWN PROCEDURE

The Borrower shall comply with the procedure under clause 5 of this Agreement
for the drawdown of each Loan.

CLAUSE 8 REPAYMENT

8.1   Subject to clause 8.2 below, the Borrower shall repay all Loans in full on
      Final Maturity Date.

8.2   The Borrower may prepay the whole or any part of any Loan on an Interest
      Payment Date by giving the Lender not less than 10 business days' prior
      written notice to that effect, provided that the prepayment shall be a
      minimum of US$10,000,000 and a multiple of US$1,000,000. Any prepayment
      shall satisfy the Borrower's repayment obligations in

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

      respect of the Loans under clause 8.1 in inverse chronological order.

8.3   During the Availability Period, the Borrower may cancel the whole or any
      part of the Commitment (in a minimum amount of US$10,000,000 and of a
      multiple of US$1,000,000) by giving the Lender not less than 10 business
      days' prior written notice.

CLAUSE 9 GUARANTEE OF FINANCING

The Borrower has delivered to the Lender the Letter of Guarantee.

CLAUSE 10 REPRESENTATIONS AND COVENANTS

10.1  The Borrower represents to the Lender as follows:

      10.1.1 The Borrower is duly incorporated and existing in accordance with
             the laws of the PRC.

      10.1.2 The Borrower has obtained all board authorisations necessary for
             the signing of this Agreement.

      10.1.3 To the knowledge of the Borrower, the Borrower has not failed to
             disclose any of the following events which is occurring and has a
             Material Adverse Effect:

             (a)  major breach by the Borrower of law or regulations applicable
                  to the Borrower;

             (b)  the Borrower incurring or having indebtedness (except
                  Permitted Indebtedness) or providing mortgage or pledge
                  security (except Permitted Security) in favour of third
                  parties;

             (c)  current litigation or arbitration involving the Borrower
                  which, if successful, will result in a liability of the
                  Borrower of more than the greater of (1)US$2,000,000 or (2)
                  10% of the then paid up registered capital of the Borrower;

             (d)  other events that will have a Material Adverse Effect.

10.2  The Borrower covenants with the Lender as follows:

      So long as the Borrower has not fully repaid the Loan(s) under this
      Agreement:

      10.2.1 The Lender will be the Borrower's major bank for its deposit,
             domestic settlement, international settlement and other
             intermediary businesses and identify the Lender as its major bank
             for business co-operation, provided that the Lender's terms and
             quality of service are at least equivalent to terms and quality
             offered by other financial institutions operating in Jiangsu
             Province.

      10.2.2 The Borrower will obtain, comply with the terms of and maintain in
             force and effect all approvals and licences required in or by any
             law or regulations of the PRC to enable it to lawfully enter into
             and perform its obligations under this

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

             Agreement and to operate its business.

      10.2.3 The Borrower shall:

             (a)  within 180 days after the end of each of its financial years,
                  deliver to the Lender one set of its audited financial
                  statements for such financial year;

             (b)  within 30 days after the end of each quarter (being the end of
                  each of the Borrower's fiscal quarters) in each of its
                  financial years, deliver to the Lender one set of its
                  unaudited financial statements for such period;

             (c)  provide to the Lender such information about the Borrower's
                  financial condition as the Lender may reasonably require; and

             (d)  ensure that each set of financial statements delivered by it
                  pursuant to sub-clauses (a) and (b) above is prepared in
                  accordance with GAAP and consistently applied.

      10.2.4 The Borrower will ensure that:

             (a)  the maximum liability to assets ratio, as determined by
                  reference to its relevant financial statements delivered to
                  the Lender in accordance with clause 10.2.3 above, (1) for
                  each of the financial years of 2004 and 2005 will not exceed
                  0.75 and (2) in each financial year thereafter, will not
                  exceed 0.7. Liability to assets ratio means, in relation to
                  any financial year of the Borrower, the ratio of the
                  Borrower's total liability to its total assets, as determined
                  by reference to its relevant financial statements delivered to
                  the Lender in accordance with clause 10.2.3 above;

             (b)  the minimum ratio of interest cover, as determined by
                  reference to its relevant financial statements delivered to
                  the Lender in accordance with clause 10.2.3 above, will not be
                  lower than 2 in each year from and including 2005. In relation
                  to any financial year, interest cover means the ratio of
                  EBITDA to the interest expense of the Borrower for that year.
                  EBITDA means the total operating profit of the Borrower for
                  that financial year:

                  (1)   before taking into account:-

                        (i)    interest expense;

                        (ii)   tax;

                        (iii)  all extraordinary and exceptional items;

                        (iv)   foreign exchange gains or losses; and

                  (2)   after adding back all amounts provided for depreciation
                        and amortisation (to the extent already deducted in
                        determining operating profit),

                  in each case as determined by reference to the relevant
                  financial statements delivered by the Borrower to the Lender
                  under clause 10.2.3 above.


<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

      10.2.5  The Loan(s) borrowed by the Borrower under this Agreement will be
              fully used for the purposes of the Project as set out in clause 3
              and the Borrower will not change such use without the Lender's
              consent.

      10.2.6  The Borrower will not to sell, transfer, distribute or dispose of
              all or a material part of its business or assets, except Permitted
              Disposals.

      10.2.7  The Borrower will not create security over any of its present or
              future assets or provide security of any nature for the liability
              of any third party, in each case except Permitted Security.

      10.2.8  The Borrower will maintain insurances on and in relation to its
              business and assets with reputable underwriters or insurance
              companies against such risk and to such extent as is usual for
              prudent companies carrying on a business such as that carried on
              by the Borrower and the Borrower shall not terminate such
              insurances for any reason. If the Borrower terminates the
              insurances, the Lender is entitled to continue or effect such
              insurances on its behalf as may be reasonably necessary for the
              Borrower's business and the relevant expenses shall be borne by
              the Borrower.

      10.2.9  The liabilities of the Borrower to the Lender under this Agreement
              shall rank at least pari passu with the liabilities of the
              Borrower to other unsecured creditors save those whose claims are
              preferred by law.

      10.2.10 The Borrower shall not declare any Dividends in any year if:

              (a)   it has no Net Profit in that year;

              (b)   its Net Profit in that year does not exceed its
                    Accumulated Losses;

              (c)   it has not fully repaid all principal and interest under
                    this Agreement that have fallen due up to the date of
                    payment of the relevant Dividends; or

              (d)   the cashflow amount before distribution of Dividends is
                    insufficient to meet the needs of further investments as
                    shown in the Annual Cash Flow Forecast.

              In this clause 10.2.10:

              "ACCUMULATED LOSSES" means the accumulated losses described as
              such in, or determined by reference to, the relevant financial
              statements of the Borrower;

              "ANNUAL CASH FLOW FORECAST" means the annual cash flow forecast,
              as amended from time to time, delivered by the Borrower to the
              Lender;

              "DIVIDENDS" means any dividends or other distributions (including
              by way of bonus) out of profits to the investors of the Borrower;

              "NET PROFIT" means the net profit described as such in the
              relevant financial statements of the Borrower.

      10.2.11 The Borrower will procure that Maxtor Corporation directly or
              indirectly
<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

                  beneficially owns 50.1% or more of the paid up registered
                  capital of the Borrower, so as to give Maxtor Corporation a
                  controlling interest in the Borrower.

         10.2.12  The Borrower shall promptly notify the Lender by written
                  notice in the event that (1) the Borrower's registered capital
                  is reduced or materially changed (including, but not limited
                  to, reduction of capital, except where the Borrower has fully
                  repaid principal and paid interest which has fallen due in the
                  relevant year and is able to satisfy the needs of
                  capitalization of profits in accordance with the Capital
                  Injection Schedule), (2) the Borrower is the subject of a
                  merger (except a restructuring of the Group or where the
                  Borrower is the surviving entity in such merger), or where the
                  Borrower takes any steps for its dissolution, bankruptcy or
                  cessation of business or (3) there is the occurrence of an
                  Event of Default.

         10.2.13  The Borrower shall provide a Capital Verification Report as
                  soon as reasonably practicable after each capital injection.
                  The Capital Verification Report shall be conclusive evidence
                  in respect of the paid up registered capital except that the
                  Borrower shall be entitled to provide other evidence to the
                  reasonable satisfaction of the Lender whenever the relevant
                  Capital Verification Report is not available for any reason.
                  In the case of material change to the schedule below, the
                  Lender and the Borrower shall consult each other amicably on
                  the principle of equality, mutuality and good faith. The
                  initial injection schedule for the registered capital is set
                  out below.

<TABLE>
<CAPTION>
                                     EQUIPMENT
              CASH INJECTION        CONTRIBUTION
YEAR            (US$10,000)         (US$10,000)
<S>           <C>                   <C>
2003               1000
2004                500                1179.7
2005                                   1533.6
2006                                     2000
2007                                      457
                                       ------
Total                                  6670.3
</TABLE>

                  The above schedule may be amended from time to time by the
                  Borrower and will not affect the Borrower's utilization of the
                  Facility.

         10.2.14  The Borrower will sign and deliver to the Lender a Loan
                  Receipt in respect of each Loan upon receiving the proceeds of
                  that Loan from the Lender.

CLAUSE 11 EVENTS OF DEFAULT AND REMEDY

Upon the occurrence of any of the following events to the Borrower, unless
remedial action is taken within 90 days to the reasonable satisfaction of the
Lender (except an event under sub-clause 11.1 below), the Lender is entitled to
cancel the undrawn portion of the Facility and/or declare all

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

Loan(s) and interest accrued thereon under this Agreement to be immediately due
and payable on demand of the Lender:

11.1     the Borrower fails to repay principal of any Loan under this Agreement
         after 5 days of its due date or fails to pay interest under this
         Agreement after 10 days of its due date;

11.2     any material loss of or damage to the Borrower's major assets or
         business which will have a Material Adverse Effect;

11.3     the Borrower ceases to carry on its business or threatens to cease to
         carry on its business;

11.4     substantial change to the scope of the business of the Borrower, as set
         out in its business licence which will have a Material Adverse Effect;

11.5     any action is taken or legal proceedings are started for the bankruptcy
         or liquidation of the Borrower except where the Borrower in good faith
         takes steps to dismiss such action or proceedings;

11.6     any material legal proceedings involving the Borrower or its assets
         which will have a Material Adverse Effect (except where the Borrower in
         good faith takes steps to defend such proceedings);

11.7     any representation made by the Borrower in this Agreement is or proves
         to be incorrect in any material respect when made; or

11.8     the Borrower fails to perform or comply with any covenants in clause
         10.2 in any material respect.

CLAUSE 12 TAX AND EXPENSES

All relevant tax and expenses, including but not limited to stamp duty, interest
tax, court fees, enforcement fees, legal representation fees, notarisation fees
in relation to the formation and performance of this Agreement and dispute
resolution under this Agreement shall be shared by the Borrower and the Lender
in accordance with the relevant regulation.

CLAUSE 13 SET-OFF, ASSIGNMENT AND RESERVATION OF RIGHTS

13.1     No party shall purport to exercise any right of set-off. No party shall
         assign its obligations under this Agreement to any third party without
         the written consent of the other party.

13.2     No indulgence, allowance, preference to the Borrower or delay in
         exercising any right under this Agreement by the Lender shall effect,
         impair or restrict any right or benefit of the Lender under this
         Agreement, the law or the regulations, and shall not operate as a
         waiver by the Lender of its rights and benefit under this Agreement and
         shall not discharge the Borrower from any obligation that it shall
         perform under this Agreement.

CLAUSE 14 AMENDMENT AND TERMINATION

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

This Agreement may be amended, supplemented or discharged by agreement in
writing of both parties. The amendment to and supplement of this Agreement form
part of this Agreement and shall have equal force and effect to this Agreement.

CLAUSE 15 GOVERNING LAW, DISPUTE RESOLUTION AND JURISDICTION

15.1     The formation, validity, interpretation and implementation of this
         Agreement shall be governed by the published and publicly available
         laws of the PRC, but in the event there is no published law in the PRC
         governing a particular matter relating to this Agreement, reference
         shall be made to general international commercial practices.

15.2     Any question, dispute or difference between the parties arising from
         the formation, performance or otherwise in connection with this
         Agreement shall first be resolved through amicable negotiation and
         friendly consultation between the parties, as follows:

         15.2.1   either party may at any time give a written notice (the "FIRST
                  NOTICE") to the other requesting for resolution of the
                  question, dispute or difference through negotiation and
                  consultation;

         15.2.2   within fourteen (14) days of the First Notice, each party
                  shall cause a senior executive to meet and confer at such time
                  and venue as may be convenient to the parties, with a view to
                  resolving the question, dispute or difference;

         15.2.3   if the question, dispute or difference cannot be resolved by
                  the parties within thirty (30) days of the First Notice,
                  either party may give a written notice (the "SECOND NOTICE")
                  to the other requesting for a meeting between the respective
                  chief executive officer (in the case of the Lender, the
                  president of the bank branch; and in the case of the Borrower,
                  its general manager) of the parties; and

         15.2.4   within fourteen (14) days of the Second Notice, each party
                  shall cause its chief executive officer (in the case of the
                  Lender, the president of the bank branch; and in the case of
                  the Borrower, its general manager) to meet and confer at such
                  time and venue as may be convenient to the parties, with a
                  view to resolving the question, dispute or difference.

15.3     If no resolution is reached within ninety (90) days of the First
         Notice, the question, dispute or difference shall be submitted to the
         China International Economic and Trade Arbitration Commission
         ("CIETAC") Beijing Branch in Beijing for final resolution by
         arbitration in accordance with the rules and procedures of CIETAC
         supplemented by the following:

         15.3.1   the arbitration shall be conducted in the English and Chinese
                  languages. There shall be three (3) arbitrators, all of whom
                  shall be fluent in English and Chinese and shall have
                  experience in handling cases involving the borrowing of loans
                  by foreign invested enterprises from domestic banks in the
                  PRC;

         15.3.2   the English-language text and Chinese-language text of this
                  Agreement shall be the reference text for the arbitrators;

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

         15.2.3   the arbitration award shall be final and binding on the
                  parties, and the parties agree to be bound thereby and to act
                  accordingly; and

         15.2.4   the costs of the arbitration (including the arbitration fees
                  and lawyers' fees) shall be borne by the losing party.

CLAUSE 16 COMMENCEMENT OF AGREEMENT

This Agreement shall take effect after the authorised signatories of both
parties have signed, impress their respective official chops on and day this
Agreement.

This Agreement is in both Chinese and English and executed in four counterparts,
each of the Borrower and the Lender keeps two counterparts, all with equal force
and effect.

CLAUSE 17 SPECIAL NOTE

The Lender and the Borrower have sufficiently consulted each other on all the
terms of this Agreement.

Each of the Lender and the Borrower has paid special attention to all terms
concerning the rights and obligations of both parties and understands the same
thoroughly and accurately. The Lender's and the Borrower's understanding of the
terms of this Agreement is fully consistent.

BORROWER:                                LENDER:

MAXTOR TECHNOLOGY (SUZHOU) CO., LTD      BANK OF CHINA  SUZHOU INDUSTRIAL PARK
                                         SUB-BRANCH

[SEAL]                                   [SEAL]
___________________(official chop)       ________________________(official chop)

/s/ [ILLEGIBLE]                          /s/ [ILLEGIBLE]
---------------------------------        ---------------------------------------
Legal representative                     Legal representative
(or authorised signatory)                (or authorised signatory)

Date : August 16, 2004                   Date: August 16, 2004
<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

                                   APPENDIX A
                                DRAWDOWN NOTICE

To: Bank of China Suzhou Branch / Bank of China Suzhou Industrial Park
Sub-branch:

Pursuant to the Foreign Exchange Loan Agreement dated ________ August 2004
signed by Maxtor Technology (Suzhou) Co., Ltd. (hereinafter called the
"BORROWER") and submitted to you, we the Borrower wish to utilize a Loan as
follows:

(1)   The amount of the Loan is (in words) United States Dollars ________ (in
      figure) US$ ________________________.

(2)   This is the _____________ (number) utilization under the Foreign Exchange
      Loan Agreement.

(3)   The Utilization Date of the Loan is ______________ August 2004.

(4)   Please remit the proceeds of the Loan to our bank account, the account
      number is US dollar account no. 23865508091014, Bank of China Suzhou
      Industrial Park Sub-branch.

This Drawdown Notice shall be irrevocable.

                          Signed by authorised signatory for and on behalf of
                          MAXTOR TECHNOLOGY (SUZHOU) CO., LTD.

                          ______________________________ (Official chop)

                          Date: _____________________________

<PAGE>

[MAXTOR LOGO]                                                      BANK OF CHINA

APPENDIX B : SAMPLE OF LOAN RECEIPT

The following is a scanned version of the front copy of a loan receipt. The loan
receipt shall be completed neatly and orderly, and the seal shall be affixed.

(____Subject) Foreign Exchange Loan Receipt (loan receipt counterfoil copy) One

             Date of loan:______20__       Loan agreement number:________

<TABLE>
<S>                 <C>                   <C>          <C>             <C>                  <C>             <C>           <C>
Loan                Name                                               Borrowing                Name
receiving entity                                                       entity
                    Settlement bank account                                                 Borrowing bank
                    number                                                                     account
                    Account opening bank                                                       Account
                                                                                            opening bank

Direct payment      Method of payment                                  Applicable interest rate

                    Commercial contract number

Amount of loan                                                                                                 @
                                                                                                               US$

                                    Term of loan                                            Bank's comment in examination and
                                                                                            approval:

 No.                Scheduled repayment                  T            Scheduled
                           date                                        repayment
                                                                        amount*
 1

 2

 3

 Seal of borrowing entity                                                                    Finance        Supervisor    Chief
                                                                                            personnel                     Supervisor

</TABLE>

            This copy shall be kept by lending department for record

<PAGE>
[MAXTOR LOGO]                                                      BANK OF CHINA

APPENDIX 3 : LETTER OF GUARANTEE

Bank of China Suzhou Branch:

Maxtor Technology (Suzhou) Co., Ltd (the "BORROWER") has entered into a Foreign
Exchange Loan Agreement (No.___________________________________________) on
__________________2003.

To secure the full performance of the Loan Agreement, Maxtor International
S.a.r.l ("GUARANTOR") hereby makes its guarantees under the provisions of the
Security Law of the People's Republic of China as follows:

1     Maxtor International S.a.r.l. shall act as a guarantor and secure the
      performance by borrower of all of the obligations under the Loan
      Agreement.

2     If due to whatever reason that the Loan Agreement has been breached by the
      borrower thereunder, Guarantor shall immediately perform its guarantee
      obligation unconditionally and effectuate all payment including without
      limitation to all the principal, interest, penally, indemnity and any
      relevant expenses to the lenders according to the instructions of the
      latter.

3     The guarantee made by Guarantor under this Letter shall constitute a joint
      liability of Guarantor.

4     The guarantee made under this Letter shall be an irrevocable guarantee,
      the validity of which shall continue till the day when all the
      indebtedness under the Loan Agreement has been fully discharged.

5     The Execution and performance of this Letter shall be to Guarantor's own
      wills and in Guarantor's good faith. Guarantor has obtained all necessary
      authority to execute and perform this Letter. Such authorization and the
      execution and performance under such authorization shall not contradict
      any of the provisions of the by-laws of Guarantor or of any regulations or
      contract that have binding force upon Guarantor. All the process
      concerning the execution and performance of this Letter has been handled
      in due course and maintain its validity.

6     This Letter and the rights and obligations of the parties hereunder shall
      be governed by and construed in accordance with the laws of People's
      Republic of China.

7     The Guarantor agrees that any legal action or proceeding arising our of or
      relating to this Letter may be brought in the courts of People's Republic
      of China.

Guarantor:

Signed by:

                                            Maxtor International S.a.r.l

                                            Authorised signatory & Company stamp

                                            Date: ____________________________