EXHIBIT 10.53

LICENSE AGREEMENT ("Agreement") with an 
Effective Date of January 1, 1997 between 
INTERNATIONAL BUSINESS MACHINES 
CORPORATION, a New York corporation ("IBM"), and 
READ-RITE CORPORATION, a Delaware corporation 
("READ-RITE").

        Each of the parties (as "Grantee") desires to acquire a 
nonexclusive license under patents of the other party (as 
"Grantor").  In consideration of the premises and mutual 
covenants herein contained, IBM and READ-RITE agree as 
follows:

Section 1. Definitions

1.1     "Information Handling System" shall mean any 
instrumentally or aggregate of instrumentalities primarily 
designed to compute, classify, process, transmit, receive, 
retrieve, originate, switch, store, display, manifest, measure, 
detect, record, reproduce, handle or utilize any form of 
information, intelligence or data for business, scientific, 
control or other purposes.

1.2     "IHS Product" shall mean an Information Handling 
System or any instrumentality or aggregate of 
instrumentalities (including, without limitation, any 
component, subassembly, computer program or supply) 
designed for incorporation in an Information Handling 
System; provided, however, that a Manufacturing Apparatus 
(as defined hereinafter) shall not be considered to be an IHS 
Product.

1.3     "IBM Licensed Patents" and "READ-RITE Licensed 
Patents" shall mean all patents, including utility models and 
typeface design patents and registrations (but not including 
any other design patents or registrations) of Grantor:

        (a) issued or issuing on patent applications entitled to 
an effective filing date prior to January 1, 2001 ("Futures 
Date");

        (b) which, but for this Agreement, would be 
infringed by Grantee's making, using, importing, offering for 
sale, or leasing, selling or otherwise transferring a Grantee's 
Licensed Product in the country in which such patent exists; 
and

        (c) under which patents or the applications therefor 
Grantor or any of its Subsidiaries now has, or hereafter 
obtains, the right to grant licenses to Grantee of or within the 
scope granted herein without such grant or the exercise of 
rights thereunder resulting in the payment of royalties or other 
consideration by Grantor or its Subsidiaries to third parties 
(except for payments between Grantor and its Subsidiaries, 
and payments to third parties for inventions made by said third 
parties while employed by Grantor or any of its Subsidiaries).

        Licensed Patents shall include said patent 
applications, continuations in part of said patent applications, 
and any patents reissuing on any of the aforesaid patents.

1.4     "Licensed Patents" shall mean either IBM Licensed 
Patents or READ-RITE Licensed patents as the context 
indicates.

1.5     "Licensed Products" shall mean either IBM Licensed 
Products or READ-RITE Licensed Products as the context 
indicates.

1.6     "Magnetic Medium" shall mean a rigid planar or 
flexible element having a magnetic material coated or plated 
on or otherwise deposited on, or incorporated in, one or both 
surfaces of said element and primarily designed for 
magnetically storing digital information recorded thereon.

1.7     "Magnetic Transducer Apparatus" shall mean an IHS 
Product comprising any instrumentality or aggregate of 
instrumentalities  (including, without limitation, head 
assemblies, head assembly suspension apparatus, base plates, 
slider mechanisms, head arms and any signal processing 
circuitry carried thereby or disposed thereon, motion actuators 
and supporting carriages) primarily designed for reading, 
writing or erasing information on, in or from a Magnetic 
Medium by transducing certain of the magnetic characteristics 
of such medium to electrical signals, or vice versa, which 
characteristics and signals are indicative of such information.  
Magnetic Transducer Apparatus shall include apparatus 
designed for magneto optical recording, but shall not include 
apparatus designed for optical recording.

1.8     "IBM Licensed Products" shall mean IHS Products.

1.9     "READ-RITE Licensed Products" shall mean 
Magnetic Transducer Apparatus.

1.10    "Manufacturing Apparatus" shall mean any 
instrumentality or aggregate of instrumentalities primarily 
designed for use in the fabrication (including testing) of an 
IHS Product licensed herein.

1.11    "Subsidiary" of a party hereto or of a third party shall 
mean a corporation, company or other entity:

        (a) more than fifty percent (50%) of whose 
outstanding shares or securities (representing the right to vote 
for the election of directors or other managing authority) are, 
now or hereafter, owned or controlled, directly or indirectly, 
by a party hereto or such third party, but such corporation, 
company or other entity shall be deemed to be a Subsidiary 
only so long as such ownership or control exists; or

        (b) which does not have outstanding shares or 
securities, as may be the case in a partnership, joint venture or 
unincorporated association, but more than fifty percent (50%) 
of whose ownership interest representing the right to make the 
decisions for such corporation, company or other entity is now 
or hereafter, owned or controlled, directly or indirectly, by a 
party hereto or such third party, but such corporation, 
company or other entity shall be deemed to be a Subsidiary 
only so long as such ownership or control exists; and

        (c) notwithstanding (a) and (b) above, READ-RITE 
SMI Corporation, a Japanese corporation ("READ-RITE 
SMI"), shall be deemed a Subsidiary of READ-RITE, but only 
so long as READ-RITE owns or controls, directly or 
indirectly, not less than twenty percent (20%) of the 
outstanding shares or securities (representing the right to vote 
for the election of directors or other managing authority) of 
such corporation.

Section 2.  Grants of rights

2.1     Each party, as Grantor, on behalf of itself and its 
Subsidiaries grants to the other, as Grantee, a worldwide, 
nonexclusive license under Grantor's Licensed Patents:

        (a) to make, use (including the right to use any 
apparatus and practice any method in making), import, offer 
for sale, and lease, sell and/or otherwise transfer Grantee's 
Licensed Products;

        (b) to have Grantee's Licensed Products made by 
another manufacturer for the use and/or lease, sale or other 
transfer by Grantee only when the conditions set forth in 
Section 2.2 are met; and

        (c) to make, have made, use and have used 
Manufacturing Apparatus and to practice and have practiced 
any method involved in the manufacture or use thereof; 
provided, however, that the rights granted in this Section 2.1 
(c) shall not serve to enlarge the scope of the rights granted in 
Section 2.1(b).

The license granted by each party hereunder is worldwide.  
[Section deleted - confidential treatment requested]

2.2     The license to have products made granted in Section 
2.1(b) to Grantee:

        (a) shall only apply when the specifications for such 
Grantee's Licensed Products were created by Grantee (either 
solely or jointly with one or more third parties);

        (b) shall only be under claims of Grantor's Licensed 
Patents, the infringement of which would be necessitated by 
compliance with such specifications; and

        (c) shall not apply to any products in the form 
manufactured or marketed by said other manufacturer prior to 
Grantee furnishing of said specifications.

        Unless Grantee informs Grantor to the contrary, 
Grantee shall be deemed to have authorized said other 
manufacturer to make Grantee's Licensed Products under the 
license granted to Grantee in this section when the conditions 
specified in this Section 2.2 are fulfilled.  In response to a 
written request identifying a product and a manufacturer, 
Grantee shall in a timely manner inform Grantor of the 
quantity of such product, if any, manufactured by such 
manufacturer pursuant to the license granted in Section 2.1(b).

2.3     No license or immunity is granted under this 
Agreement by either party, either directly or by implication, 
estoppel or otherwise to any third parties acquiring items from 
either party for the combination of such acquired items with 
other items (including items acquired from either party hereto) 
or for the use of such combination even if such items have no 
substantial use other than as part of such a combination.

2.4     IBM on behalf of itself and its Subsidiaries covenants 
not to sue READ-RITE for its purchase, use, import, offer for 
sale, sale and lease of READ-RITE Licensed Products made 
by another manufacturer that are covered by the claims of 
IBM Licensed Patents; provided, however, that the covenant 
in this Section 2.4 shall not apply to or serve to enlarge the 
scope of READ-RITE's license to have products made 
granted in Sections 2.1(b) and 2.1(c).  Further, the covenant in 
this Section 2.4 shall not impair or limit any of IBM's rights to 
institute any action or suit against any manufacturer from 
whom READ-RITE purchases READ-RITE Licensed 
Products.

2.5     READ-RITE on behalf of itself and its Subsidiaries 
covenants not to sue IBM for its purchase, use, import, offer 
for sale, sale and lease of IBM Licensed Products made by 
another manufacturer that are covered by the claims of IBM 
Licensed Patents; provided, however, that the covenant in this 
Section 2.5 shall not apply to or serve to enlarge the scope of 
IBM's license to have products made granted in Sections 
2.1(b) and 2.1(c).  Further, the covenant in this Section 2.5 
shall not impair or limit any of READ-RITE's rights to 
institute any action or suit against any manufacturer from 
whom IBM purchases IBM Licensed Products.

2.6     Subject to Section 2.7, the licenses granted herein 
shall include the right of each party to grant sublicenses to its 
Subsidiaries, which sublicenses may include the right of the 
sublicensed Subsidiaries to sublicense other Subsidiaries of 
said party.  No sublicense shall be broader in any respect at 
any time during the life of this Agreement than the license 
held at that time by the party that granted the sublicense.

2.7     Subject to Section 2.10, a sublicense granted to a 
Subsidiary shall terminated on the earlier of:

        (a)  the date such Subsidiary ceases to be a 
Subsidiary; and

        (b)  the date of termination or expiration of the 
license of the party that granted the sublicense.

        If a Subsidiary ceases to be a Subsidiary and holds 
any patents under which a party hereto is licensed, such 
license shall continue for the term defined herein.

2.8     In the event that neither a party nor any of its 
Subsidiaries has the right to grant a license under any 
particular Licensed Patent of the scope set forth in Section 2, 
then the license granted herein under said Licensed patent 
shall be of the broadest scope which said party or any of its 
Subsidiaries has the right to grant within the scope set forth 
above.

2.9     If, after the Effective Date, a party or any of its 
Subsidiaries ("Acquiring Party") acquires assets, either by 
acquiring an entity which owns the assets or by acquiring the 
assets from such an entity, and said entity is, as of the date of 
acquisition, licensed by the other party ("Licensor") under one 
or more Licensed Patents through an existing agreement 
pursuant to which royalties or other payments are made by 
said entity to said Licensor, then the license and other rights 
granted herein to the Acquiring Party with respect to said 
Licensed Patents shall apply to products manufactured 
through the use of said assets; provided, however, such 
royalties or other payments shall continue to be made by 
Acquiring Party to the Licensor with respect to products 
manufactured through the use of said assets notwithstanding 
that the Acquiring Party may have been licensed for the same 
Licensed Products before the acquisition.

2.10    In the event one party hereto transfers a product line 
either as part of or separate from a disposition of a Subsidiary 
to any third party, and said third party, with the written 
approval of said one party, requests in writing, within sixty 
(60) days following the effective date of the transfer 
("Transfer Date"), a license agreement with the other party 
hereto upon terms and conditions as hereinafter provided, the 
other party hereto agrees that it will enter into such license 
agreement forthwith; provided, however, such transfer shall 
include all of the following:

        (a)  patents or other intellectual property relating to 
the line of marketable products; and

        (b)  tangible assets equivalent in value to the lesser of 
fifty million U.S. dollars ($50,000,000) or twenty percent 
(20%) of the total assets of the party of which it was formerly 
a Subsidiary.
Any such agreement with such third party shall grant a 
royalty-free license under the same terms and conditions as 
the license granted to said one party herein under the other 
party's Licensed Patents for the field (as defined between the 
transferring party and such third party) of such product line, 
except in the following respects:

        (c)  such field shall be within the field then licensed 
to the transferring party;

        (d)  such field shall not be defined more broadly than 
appropriate to cover the particular product line being 
transferred and shall be in form and substance acceptable to 
such other party;

        (e) the license granted shall be limited in the twelve 
(12) months immediately following such Transfer Date to a 
volume of licensed products having an aggregate selling price 
equal to no more than the aggregate selling prices of such 
products by said one party in the twelve (12) months 
preceding such Transfer Date plus twenty-five percent (25%); 
the license granted to such third party shall be limited, in each 
of the second through fifth twelve-month periods following 
such Transfer Date, to a volume of licensed products having 
an aggregate selling price equal to no more than the limit for 
the immediately preceding twelve-month period plus twenty-
five percent (25%);

        (f) the transferring party shall relinquish its rights 
under this Agreement for such field for four (4) years 
following such Transfer Date wherein the relinquishing of its 
rights by such transferring party pursuant to this Section 
2.10(g) shall be automatically effected as an amendment 
hereto as of such Transfer Date, which amendment shall 
automatically terminate four (4) years after the Transfer Date, 
but licenses to such transferring party to use, lease, sell or 
otherwise transfer apparatus that was manufactured by or for it 
prior to the time of such relinquishing shall continue with 
respect to such apparatus;

        (g)  such third party shall grant to such other party a 
royalty-free license (under the same terms as the license 
granted to such other party herein) under all Third Party 
Patents for all products licensed herein to such other party on 
the Effective Date of this Agreement; provided, however, if 
such third party chooses not to grant such a license, then the 
Futures Date for the license between the other party and such 
third party shall be the Transfer Date.  "Third Party Patents" 
shall mean all patents throughout the world under which, at 
any time commencing with the date of the product line 
transfer, the third party or any of its Subsidiaries has the right 
to grant such licenses; and

        (h)  this Section 2.10, Section 3, and Section 4 shall 
be omitted;

        (i)  the name of such third party shall be substituted 
for the name of the transferring party;

        (j)  in the event that such third party is or becomes 
organized under the laws of a country different from that of 
the transferring party, such license agreement shall contain 
such additional terms and conditions (other than royalty 
provisions) as may exist in patent license agreements between 
the other party and other corporations organized under the 
laws of the same country.

Section 3.  Releases and Indemnification

3.1     Each party (as "Releasor") on behalf of itself and its 
Subsidiaries which are Subsidiaries as of the Effective Date, 
irrevocably releases the other party, its Subsidiaries which are 
Subsidiaries on the Effective Date and its and their respective 
customers from any and all claims of infringement of 
Releasor's Licensed Patents which claims are based on acts 
prior to the Effective Date, which, had they been performed 
after the Effective Date would have been licensed under this 
Agreement.

        The release contained herein shall not apply to any 
person other than the persons named in this Section 3 and 
shall not apply to the manufacture of any items by any person 
other than the other party or its Subsidiaries.  The release 
granted by READ-RITE to IBM is effective as of the Effective 
Date. [Section deleted - confidential treatment requested]

3.2     READ-RITE shall indemnify and hold IBM and 
IBM's Subsidiaries harmless from and against any and all 
claims, actions, suits, proceedings and litigations brought by 
READ-RITE SMI relating to infringement of any READ-
RITE SMI patents by IBM, and any losses, deficiencies, 
damages, liabilities, costs and expenses including without 
limitation, reasonable attorneys' fees and all related costs and 
expenses, to be paid or otherwise incurred in connection with 
the defense of any such claim, action, suite, proceeding or 
litigation.

Section 4. [Section deleted - confidential treatment requested]

Section 5. Term of Agreement; Acquisition of a Party

5.1     The term of the licenses granted under this 
Agreement shall be from the Effective Date until the 
expiration of the last to expire of the License Patents, unless 
earlier terminated under the provisions of this Agreement.

5.2     If one party (the "Acquired Party") is acquired by a 
third party (the "Acquiror"), becoming a Subsidiary of the 
Acquiror:

        (a)     the Acquired Party shall promptly give 
notice of such acquisition to the other party (the "non-
Acquired Party");

        (b)  the license granted to the Acquired Party herein, 
and all sublicenses (if any) granted to the Acquired Party's 
Subsidiaries, shall continue in accordance with the terms of 
this Agreement, [section deleted - confidential treatment 
requested] provided, however:

                (i) such license shall be limited in the twelve 
(12) months immediately following such acquisition to a 
volume of the Acquired Party's Licensed Products having an 
aggregate selling price equal to no more than the aggregate 
selling prices of such Products by said Acquired Party in the 
twelve (12) months preceding such transfer plus twenty-five 
percent (25%), and in each of the next twelve-month periods 
for the remaining term of this Agreement, such license shall 
be limited to a volume of the Acquired Party's Licensed 
Products having an aggregate selling price equal to no more 
than the limit for the immediately preceding twelve-month 
period plus twenty-five percent (25%); and

                (ii) such license shall continue only if the 
Acquiror grants to the non-Acquired party a royalty-free 
license (under the same terms as the license granted to the 
non-Acquired party herein) under all Acquiror Patents for the 
Licensed Products licensed herein to the Acquired Party; 
provided, however, if the Acquiror chooses not to grant such a 
license, then this license shall continue but the Futures Date in 
Section 1.3 (a) for both parties shall be automatically changed 
to the date of such acquisition.  "Acquiror Patents" shall mean 
all patents throughout the world under which, at any time 
commencing with the date of the acquisition, the Acquiror or 
any of its Subsidiaries has the right to grant such licenses; and

        (c)  except for the Futures Date which may be 
changed to the date of acquisition pursuant to Section 
5.2(b)(ii), the rights granted to the non-Acquired Party from 
the Acquired Party under this Agreement shall not be affected.

5.3     If one party (the "Acquired Party") is acquired by a 
third party such that it is no longer a separate legal entity, then 
the Acquired Party shall require as a condition precedent to 
the acquisition that the entity that survives after, or results 
from, [section deleted - confidential treatment requested]

Section 6.  Other License Rights

6.1     It is recognized that the parties hereto or their 
respective Subsidiaries may now have, or hereafter obtain, the 
right to grant licenses under one or more patents of any 
country, including utility models and including type font 
design patents and registrations (but not including any other 
design patents or registrations), issuing on patent applications 
entitled to an effective filing date prior to the Futures Date and 
under the patent applications therefore, but that such grant or 
the exercise of rights thereunder shall result in payment of 
royalties or other consideration by Grantor or its Subsidiaries 
to third parties.  Each party (as Grantor) agrees that, upon 
written request, it shall grant to the other party the extent and 
subject to the terms and conditions under which it then has the 
right to do so, a license of the broadest scope which Grantor 
has the right to grant at any time but of no greater scope than 
the scope of the licenses granted herein with respect to any 
such patent or patent application.  Such license shall be 
granted under a separate agreement, upon payment of the 
same royalty or other consideration as that which Grantor or 
any of its Subsidiaries is obligated to pay to a third party 
because of the grant of such license or the exercise of rights 
thereunder.

6.2     Upon written request by a party, the other party shall 
inform the requesting party of those patents or patent 
applications coming within the scope of Section 6.1 at the 
time of such request.

Section 7. [Section deleted - confidential treatment requested]

7.1     [Section deleted - confidential treatment requested]

7.2     Notices and other communications shall be sent by 
facsimile or by registered or certified mail to the following 
addresses and shall be effective upon mailing or transmission:

For IBM:                        For READ-RITE:
Director of Licensing           Read-Rite Corporation
IBM Corporation                 Attn: General Counsel
500 Columbus Avenue             345 Los Coches Street
Thornwood, New York  10594      Milpitas, California 95035
Facsimile: (914) 742-6737       Facsimile: (408)956-3203    

Section 8. Miscellaneous

8.1     Neither party shall assign or grant any right under 
any of its Licensed Patents unless such assignment or grant is 
made subject to the terms of this Agreement.

8.2     Neither party shall assign any of its rights or delegate 
any of its obligations under this Agreement.  Any attempt to 
do so shall be void.  However, a party which undergoes 
reorganization may assign such rights and delegate such 
obligation to its legal successor, provided that after the 
reorganization, the successor and its Subsidiaries will have 
essentially the same assets as such party and its Subsidiaries 
had prior to the reorganization.

8.3     Neither party shall use or refer to this Agreement or 
any of its provisions in any promotional activity.

8.4     Each party represents and warrants that it has the full 
right and power to grant the licensee and release set forth in 
Sections 2 and 3.  Each party (as a Grantor) further represents 
and warrants that prior to the execution of this Agreement, it 
has informed the other party of any patent originating from 
inventions made by employees of Grantor or its Subsidiaries, 
which patent is now owned by Grantor or its Subsidiaries and 
which patent, owing to prior arrangements with third parties, 
does not qualify as a Licensed Patent of Grantor under which 
licenses are granted in Section 2.  Neither party makes any 
other representation or warranties, express or implied, nor 
shall either party have any liability in respect of any 
infringement of patents or other rights of third parties due to 
the other party's operation under the license herein granted.

8.5     Nothing contained in this Agreement shall be 
construed as conferring any rights by implication, estoppel or 
otherwise under any non-patent intellectual property right, or 
any patents other than the Licensed Patents.  Neither party is 
required hereunder to furnish or disclose to the other any 
technical or other information (including copies of Licensed 
Patents).

8.6     Neither party shall have any obligation hereunder to 
institute any action or suit against third parties for 
infringement of any of its Licensed Patents or to defend any 
action or suit brought by a third party which challenges or 
concerns the validity of any of its Licensed Patents.  Neither 
party shall have any right to institute any action or suit against 
third parties for infringement of any of the other party's 
Licensed Patents.  Neither party, nor any of its Subsidiaries, is 
required to file any patent application, or to secure any patent 
or patent rights, or to maintain any patent in force.

8.7     Each party shall, upon a request from the other party 
sufficiently identifying any patent or patent application, 
inform the other party as to the extent to which said patent or 
patent application is subject to the licenses and other rights 
granted hereunder.   If such licenses or other rights under said 
patent or patent application are restricted in scope, copies of 
all pertinent provisions of any contract or other arrangement 
creating such restrictions shall, upon request, be furnished to 
the party making such request, unless such disclosure is 
prevented by such contract, and in such event, a statement of 
the nature of such restriction shall be provided.

8.8     If a third party has the right to grant licenses under a 
patent to a party hereto (as a "Licensee") with the consent of 
the other party hereto, said other party shall provide said third 
party with any consent required to enable said third party to 
license said Licensee on whatever terms such third party may 
deem appropriate.  Each party hereby waives any right it may 
have to receive royalties or other consideration for said third 
party as a result of said third party's so licensing said Licensee 
within the scope of the licenses granted under Section 2 of this 
Agreement.

8.9     As of the Effective Date of this Agreement, the 
patent license agreement between IBM and READ-RITE 
dated as of October 1, 1986 (the "Prior Agreement") is 
terminated, and this Agreement supersedes the Prior 
Agreement and all other license agreements and amendments 
to such agreements between the parties which relate to the 
subject matter of this Agreement, however if READ-RITE's 
license under this Agreement is terminated, READ-RITE's 
license under the Prior Agreement shall be reinstated under 
the terms and conditions of the Prior Agreement.

8.10    This Agreement shall not be binding upon the parties 
until it has been signed hereinbelow by or on behalf of each 
party.  NO amendment or modification hereof shall be valid or 
binding upon the parties unless made in writing and signed as 
aforesaid.

8.11    If any section of this Agreement is found by 
competent authority to be invalid, illegal or unenforceable in 
any respect for any reason, the validity, legality and 
enforceability of such section in every other respect and the 
remainder of this Agreement shall continue in effect so long 
as the Agreement still expresses the intent of the parties.  
However, if the intent of the parties cannot be preserved, this 
Agreement shall be either renegotiated or terminated.

8.12    This Agreement shall be construed, and the legal 
relations between the parties hereto shall be determined, in 
accordance with the law of the State of New York, USA, as 
such law applies to contracts signed and fully performed in 
New York.

8.13    The headings of sections are inserted for convenience 
of reference only and are not intended to be a part of or to 
affect the meaning or interpretation of this Agreement.  

//

        This Agreement embodies the entire understanding 
of the parties with respect to the Licensed Patents, and 
replaces any prior oral or written communications and 
between them.

Agreed to:                          Agreed to:

READ-RITE CORPORATION               INTERNATIONAL 
                                    BUSINESS
                                    MACHINES


By:                                  By:             
        R. S. Jackson                M.C. Phelps Jr.
        Vice President Business      Vice President
        Development & General 
        Counsel




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