Toshiba HDD Production Expansion
Toshiba Plans Major Hard-Drive Production Expansion, Causing Seagate and Western Digital Shares to Fall
Anonymous
Key Points
1
Toshiba’s planned expansion is in the Philippines and would mark its first major HDD investment in several years.
2
Despite Friday’s selloff, Seagate was still up more than 200% year to date, while Western Digital had gained more than 140%, reflecting the stocks’ substantial run-up before the news.
3
Goldman Sachs analyst James Schneider set a $960 price target for Seagate, implying about 17% upside, and said, “We would be buyers of the stock, especially in light of the recent pullback.”
4
The TipRanks ownership data show Vanguard as the largest reported shareholder of both companies, with stakes of 9.66% in Seagate and 9.45% in Western Digital.
Seagate Technology and Western Digital shares plummeted on October 2, 2026, after Nikkei Asia reported that Toshiba plans to double its hard-drive production capacity by fiscal 2027. The $380 million expansion in the Philippines spooked investors who feared added supply could erode pricing power for the dominant U.S. hard-drive makers. Seagate fell 14.6% to $807.62, while Western Digital dropped 13.5% to $415.29.
The selloff came despite strong year-to-date rallies—Seagate is still up over 200%, and Western Digital has gained more than 140%—as investors fretted that Toshiba's expansion would break the industry's tight supply discipline. However, Goldman Sachs analyst James Schneider urged buyers, setting a $960 price target for Seagate and citing its lead in HAMR technology and expected earnings growth.
Toshiba's First Major Expansion in Five Years
Toshiba, the smallest of three global hard-drive makers, announced plans to invest ¥60 billion (~$380 million) at its facilities in the Philippines. The company aims to double its nearline drive output by March 2028 and boost its global HDD storage capacity share from just over 10% to around 30%. Nikkei Asia reported the expansion marks Toshiba's first significant hard-drive investment in roughly five years.
The plants will use automation to increase per-unit drive capacity by up to 40% while reducing required workforce additions by 40%, according to the research briefing. Toshiba also plans to launch 30TB-class drives by 2027, followed by 65TB-class models in 2030 and 100TB-class drives later, ramping up capacity as AI data-center demand grows.
Why Markets Feared a Supply Collapse
For years, Seagate and Western Digital enjoyed pricing power and fat profit margins because AI-driven demand for data-center storage vastly outpaced production. Hard drives remain far cheaper than SSDs—nearly 20 times less per terabyte—making them the go-to for hyperscaler storage. With tight supply, both companies could dictate prices and protect profitability.
Investors worried that Toshiba's massive expansion would break this cozy oligopoly, flooding the market with new capacity and crushing prices. SeekingAlpha noted the broader sector selloff affected both U.S. makers on the same day. But Morgan Stanley quickly argued the feared supply glut won't materialize—nearline demand through 2028 will still outpace Toshiba's additions, it said.
Goldman Sachs Sees Seagate as a Buy on the Dip
Goldman Sachs analyst James Schneider stuck by Seagate with a Buy rating and $960 price target—implying 17% upside from the post-selloff level. He cited the company's lead in HAMR (Heat-Assisted Magnetic Recording) technology, which is expected to overtake older PMR drives by late 2026, and strong earnings momentum ahead.
Schneider said, "We would be buyers of the stock, especially in light of the recent pullback." Citi and Evercore also noted that converting Toshiba's capital spending into actual production takes 12 to 24 months, meaning any market impact lies well into the future. Additionally, Citi highlighted that Toshiba depends on outside suppliers for critical components, delaying its ramp.
Long-Term Contracts Shield U.S. Makers From Immediate Risk
Both Seagate and Western Digital have locked in long-term customer deals with cloud hyperscalers. Seagate's nearline storage capacity is heavily committed through calendar 2027–2028, while Western Digital is negotiating multi-year contracts extending through 2031. These agreements protect pricing and revenue in the near term.
Still, competition will intensify when those contracts come up for renewal in 2028–2031. Vanguard Group holds the largest reported stakes in both companies—9.66% of Seagate and 9.45% of Western Digital—signaling long-term institutional confidence despite Friday's panic.
Sentiment
Mostly NegativeNEGATIVENEUTRALPOSITIVE
Publishers
35
Articles
47
Reach
82
A
AnonymousAuthor
