Seagate Technology and Western Digital shares extended their decline on Tuesday, pressured by reports of Toshiba's plans to expand hard-disk drive production and a potential bidding war for TDK's magnetic-head unit.
Bloomberg reported that Seagate and Toshiba are competing to acquire TDK's hard-drive magnetic-heads business, the only independent manufacturer of such components. The deal could be worth several billion dollars, according to sources cited by Bloomberg.
The report follows a Nikkei article indicating Toshiba intends to double its data-centre hard-drive production capacity during fiscal 2027. That news triggered a 10% drop in Seagate and Western Digital shares on Friday, though they partially recovered on Monday.
Shares Slide on Tuesday
Seagate shares fell 8.9% to $808.08 on Tuesday, leaving the stock roughly 14% below Thursday's close. Western Digital dropped more than 6.4% to $413.16. Both companies are dominant players in the global HDD market, while Toshiba remains a distant third.
The recent volatility reflects investor concerns about increased competition and potential supply-chain shifts. Seagate and Western Digital have benefited from rising demand for storage tied to AI data-centre expansion, as hard drives remain a primary storage option for cloud providers handling massive data volumes.
TDK Deal Could Reshape Supply Chain
TDK's magnetic-head business is strategically critical because it supplies components to Seagate, Western Digital, and Toshiba. While Seagate and Western Digital manufacture some heads internally, they rely on TDK to manage demand spikes. Toshiba depends entirely on TDK for this component and needs access to its technology to mass-produce high-capacity heat-assisted magnetic recording drives.
Wedbush analyst Matt Bryson noted in an Investor's Business Daily report that Seagate would likely face antitrust hurdles in acquiring TDK's magnetic-head business, as such a deal could leave Toshiba dependent on a competitor. The winning bidder could gain greater control over a key part of the HDD supply chain, potentially enhancing pricing power and limiting rivals' expansion capabilities.
A Toshiba spokesperson said the Bloomberg report was inconsistent with the company's understanding and that of its principal backer, Japan Industrial Partners, without providing further details.
AI Storage Demand Intensifies Competition
The potential transaction comes as AI-driven data growth fuels demand for high-capacity storage. According to TrendForce, Seagate and Western Digital each hold roughly 45% of the HDD market based on bits supplied, while Toshiba has about 10%. The reported bidding process could attract antitrust scrutiny given the market's concentration and the strategic importance of data-centre storage.
Bloomberg also reported that the companies have discussed maintaining access to magnetic heads, including a possible joint venture, though talks remain preliminary and could collapse. TDK is considering selling the HDD head business to focus on batteries, passive components, and sensors, areas where it expects stronger AI-related demand, including wearable devices like smart glasses.
This article is for informational purposes only and does not constitute financial advice.
