Hitachi Ltd, Japan's biggest electronics conglomerate, plans to exit the business of making small hard disk drives as demand shifts to flash memory chips, the Nikkei business daily reported on Sunday. Hitachi's hard drive unit, Hitachi Global Storage Technologies Inc, has already stopped production of 1-inch hard drives and plans to stop shipping 1.8-inch drives around next summer, the newspaper said. The Nikkei also said Hitachi rival Fujitsu Ltd has given up on plans to enter the market for small drives. Fujitsu had been developing 1.8-inch drives with U.S.-based Cornice with plans to bring a product to market in 2007. Hitachi will focus on 2.5-inch and 3.5-inch drives, anticipating strong demand for the bigger drives that are used in personal computers and digital electronics such as DVD recorders. The move comes as Hitachi considers selling a stake in its loss-making hard drive business to bring in fresh capital and expertise.