Seagate and Western Digital shares fall on Toshiba HDD expansion

Investing.com -- Seagate Technology (NASDAQ) shares fell 11% on Friday, while Western Digital (NASDAQ) dropped 7%, after a report that Toshiba plans to significantly expand its hard disk drive production capacity to meet growing demand from AI data centers.

According to Nikkei, Toshiba plans to invest about ¥60 billion ($400 million) to double its HDD production capacity by fiscal 2027. The expansion will center on the company’s factory in the Philippines and is aimed at supplying the rapidly growing demand for storage from AI infrastructure.

The HDD market is dominated by three companies: Seagate, Western Digital and Toshiba. Toshiba currently accounts for just over 10% of the market based on capacity, according to Nikkei, but has set a medium-term target of reaching a 30% share.

The planned expansion raises concerns about intensifying competition in an already concentrated market. Toshiba’s ambitions would put it in a stronger position to compete with Seagate and Western Digital for the growing AI data-center storage market, potentially putting pressure on market share and pricing.

The reaction also comes after a massive rally in both stocks this year, leaving them particularly sensitive to any signs that competition could increase. Seagate shares had gained roughly 240% this year before Friday’s decline, while Western Digital had risen about 170%.

That sharp run-up has raised the bar for the stocks, making news that could challenge the industry’s favorable supply-demand dynamics more likely to trigger profit-taking.

The news comes as investors have increasingly focused on the storage requirements of AI infrastructure. While spending by hyperscalers and data-center operators is expected to drive substantial demand for HDDs, a significant increase in Toshiba’s capacity could give customers more supply options as the market expands.

SanDisk (NASDAQ), which also has exposure to the data-storage market, fell about 1% following the report.

Original Article

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