Strategic Alliance Agreement

EXHIBIT 10.4


[LETTERHEAD OF HEADWAY TECHNOLOGIES APPEARS HERE]


AGREEMENT


TDK/SAE and Headway Technologies, Inc. desire to enter into a strategic alliance.


* TDK/SAE desires technical interaction with Headway Technologies' wafer
organization to further expand and enhance its MR head technology.


* Headway Technologies desires high volume slider, HGA and HSA manufacturing
by SAE for its MR head products.


SAE, with TDK, and Headway believe it is desirable to enter into a mutually beneficial strategic alliance with the aim of accomplishing these objectives.


The basic intent of both parties relative to this strategic alliance is outlined below.


This document is intended to represent a binding agreement on behalf of TDK/SAE and Headway Technologies.


TECHNOLOGY SUPPORT


Headway Technologies will support TDK's MR head technology objectives in its Kofu wafer factory as follows:


A. ON-SITE VISITS. Headway will, at its own expense, provide technical
support by sending Engineering personnel at TDK's request to analyze TDK's
6" wafer process, tooling and materials. Following this analysis Headway
will provide a list to recommendations based on its knowledge and
experience to TDK Engineering personnel. These recommendations would
represent the most advanced technical guidance Headway Engineering
personnel could provide at that point in time to improve the technical
performance, yield and efficiency of the Kofu wafer manufacturing facility.


These visits can occur at TDK's request no more frequently than once (1)
per calendar quarter and by no more than four (4) Engineering personnel for
no longer than one (1) week.


B. VISITS TO HEADWAY TECHNOLOGIES. Engineering personnel from TDK may, at
TDK's own expense, visit Headway Technologies for han ...