Toshiba Wraps Up Fujitsu Hard Drive Biz

Toshiba and Fujitsu have reached an agreement that will see Toshiba take over Fujitsu's hard drive manufacturing business.

Although the deal has been percolating for some months, Fujitsu and Toshiba have officially dotted the i’s and crossed the t’s on a memorandum of understanding that will see Fujitsu’s hard drive manufacturing business transferred to Toshiba. Under the agreement, Fujitsu will first spin off its hard disk business into a new company, which will be 80 percent owned by Toshiba; over time, Toshiba will buy out the remaining 20 percent to make the hard drive business a wholly-owned Toshiba subsidiary. Financial terms of the deal weren’t announced, but industry watchers generally put the deal in the $350 to $450 million range.

Toshiba is already a major developer of small form factor (2.5-inch and smaller) hard drives; the Fujitsu acquisition will let the company move into the enterprise, server, and data storage markets. Getting a foothold in enterprises should also let Toshiba expand its SSD business, including creating hybrid devices that combine flash memory and Fujitsu hard drive technology. And Toshiba is bullish on the deal: they expect to increase their share of the worldwide hard drive market to over 20 percent by the year 2015.

Curiously, Toshiba is not getting Fujitsu’s HDD head and media businesses as part of the deal; although Toshiba certainly has its own head and media technologies, the components are absolutely central to hard drive functions.