Seagate Technology and Western Digital shares fell on Tuesday as investors assessed Toshiba’s potential expansion in the hard-disk drive market and a reported bidding contest for TDK’s magnetic-heads business.
Bloomberg reported that Seagate and Toshiba are competing to acquire the hard-drive magnetic-heads unit of TDK, the only independent manufacturer of magnetic-recording heads.
The deal could be worth several billion dollars, according to people familiar with the matter cited by Bloomberg.
The report follows a Nikkei report that Toshiba plans to double production capacity for data-centre hard drives during its fiscal 2027.
Seagate and Western Digital shares fell 10% on Friday following that report before recovering some of those losses on Monday.
Seagate, Western Digital shares decline
Seagate shares were down 8.9% at $808.08 on Tuesday, leaving the stock roughly 14% lower since Thursday’s close. Western Digital shares fell more than 6.4% to $413.16.
Both companies are major players in the global hard-disk drive market, while Toshiba remains a distant third.
Seagate and Western Digital have benefited from growing demand for storage linked to the expansion of artificial intelligence data centres.
Hard-disk drives remain a primary storage option for cloud providers in hyperscale data centres, as AI applications generate increasing volumes of data that need to be stored over longer periods.
Wedbush analyst Matt Bryson said in an Investor’s Business Daily report that Seagate would never receive antitrust approval to acquire TDK’s magnetic-head business because such a deal could leave the third-largest HDD vendor dependent on Seagate.
TDK shares rose as much as 7.3% in Tokyo on Tuesday, while Seagate and Western Digital declined more than 1% in premarket trading.
TDK deal could reshape HDD supply chain
TDK’s magnetic-head business is strategically important because the company supplies the component to Seagate, Western Digital and Toshiba.
Seagate and Western Digital both manufacture magnetic heads internally but also rely on TDK to manage increases in demand.
Toshiba, meanwhile, depends entirely on TDK for the component.
Toshiba also needs access to TDK’s technology as it works to mass-produce high-capacity heat-assisted magnetic recording hard drives.
The technology is considered important to the company’s efforts to narrow the gap with its larger competitors.
The winning bidder could gain greater control over an important part of the HDD supply chain, potentially increasing pricing power and affecting competitors’ ability to expand production.
A Toshiba spokesperson said the Bloomberg report was inconsistent with the company’s understanding and that of its principal backer, Japan Industrial Partners, without elaborating.
AI storage demand drives competition
The potential transaction comes as demand for hard drives rises alongside AI data-centre investment.
The companies are competing for a larger share of a market where storage capacity has become increasingly important as AI workloads generate large volumes of data.
According to TrendForce, Seagate and Western Digital each account for around 45% of the HDD market based on bits supplied, while Toshiba has about 10%.
The reported bidding process could also face antitrust scrutiny because of the concentration in the HDD market and the growing importance of data-centre storage capacity.
Representatives of the three companies also discussed ways to maintain access to magnetic heads, including a possible joint venture, according to people familiar with the matter cited by Bloomberg.
The talks remain preliminary and could fall apart.
TDK is also considering selling the HDD head business as it shifts resources towards batteries, passive components and sensors.
A sale could provide additional funds for investment in areas where the company expects stronger AI-related demand, including wearable devices such as smart glasses.
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