Toshiba to Acquire Fujitsu HDD Business

Toshiba Corp will buy Fujitsu Ltd's struggling HDD (hard disk drive) unit, consolidating the two businesses as it aims to gain more market share and control over the storage segment's prices.

As part of the deal announced today, Fujitsu will bring its HDD-related businesses and functions together in a new company. Toshiba will then acquire about an 80 percent stake in this company and make it a Toshiba Group subsidiary. Fujitsu said it will continue to hold a stake of less than 20 percent in the new company for an undisclosed period of time, after which it will become a wholly owned subsidiary of Toshiba.

While the companies did not estimate an acquisition price, Fujitsu said it will transfer to Toshiba its HDD design, development, manufacturing, sales, and all other functions currently carried out by Fujitsu and Fujitsu Group companies, with the exception of Fujitsu's HDD head and media businesses. Fujitsu said in a separate statement that Showa Denko KK will acquire its HDD media businesses.

With its deal, Toshiba said it expects to strengthen its position as a vendor of small form factor HDDs (2.5-inch and smaller HDDs). The agreement will also give Toshiba entry into the enterprise HDD market for server and data storage system applications, where Fujitsu is currently a leader.

Toshiba believes entry into the enterprise business will allow it to grow its SSD (solid state drive) business by developing SSD products for servers and enterprise storage systems, fusing Toshiba's NAND flash memory technology with Fujitsu's enterprise HDD technology. Toshiba said it expects that move "to spur expansion of the rapidly expanding SSD market."

By taking advantage of the integration of Fujitsu's HDD businesses, Toshiba also aims to strengthen collaboration with HDD parts suppliers and to promote cost reductions and the development of new technologies. Toshiba did not offer further details on the possible cost reductions or new technologies.

Going forward, Toshiba said it aims to build on the consolidation to raise its share in the overall HDD market to more than 20% by 2015.

The companies plan to conclude the business transfer between April and June.

Electronic News, a sister publication of EM Asia