Toshiba’s announcement that it plans to double its data center hard drive production by 2027 sends Seagate and Western Digital shares down by double digits. But industry analysts are taking the sell-off calmly.
· · 2 min read
A surprising investment plan by Japanese technology conglomerate Toshiba has caused unease in the U.S. stock market. According to reports, the company plans to double its capacity for high-performance hard drives in the AI data center segment by fiscal 2027. The prospect of rising supply sent shares of the two dominant U.S. providers, Seagate Technology (ISIN: IE00BKVD2N49) and Western Digital (ISIN: US9581021055), plunging by more than ten percent.
Toshiba’s attack plan in the hard drive market
Toshiba is investing around 60 billion yen (approximately 380 to 400 million U.S. dollars) in expanding its assembly capacity in the Philippines. This is the Japanese company’s first major capacity expansion in the HDD segment in about five years. The goal is to raise its own market share of shipped storage capacity from roughly 10 percent at present to 30 percent in the medium term. In this context, Toshiba is planning new production lines for 30-terabyte-class hard drives starting in 2027, as well as models with up to 100 terabytes of storage volume in the long term.
Why the market is reacting sensitively
The global market for mechanical hard drives is dominated by an oligopoly, in which Seagate and Western Digital together hold more than 80 percent market share. The ongoing AI boom and the massive upgrading of data centers have led to a significant shortage of mass storage in recent months. This gave Seagate and Western Digital strong pricing power and drove their share prices up significantly this year. Toshiba’s announcement is now stoking fears among market participants about future price wars and shrinking margins.
Analysts consider the share price plunge exaggerated
Industry experts and investment banks, however, largely view the sharp decline in the U.S. manufacturers’ shares as an overreaction. Analysts point out that Toshiba depends on external suppliers such as TDK, Resonac and HOYA for key components like read/write heads and magnetic disks. Without corresponding capacity expansions at these suppliers, the planned doubling can hardly be implemented in the short term. In addition, global demand for storage space driven by the AI boom is likely to remain larger than Toshiba’s planned capacity increase. Long-term supply agreements with cloud providers additionally secure utilization and earnings for Seagate and Western Digital.
For private investors, the latest market reaction primarily means increased volatility in the technology sector. While Toshiba’s move relativizes the narrative of a permanent storage shortage, structural hurdles in the supply chain and the immense storage needs of the AI era argue against a rapid erosion of margins. Investors should pay close attention to how Seagate and Western Digital management assesses the contract situation and the pricing environment in the upcoming quarterly figures.
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