Seagate falls 15%, Western Digital 13% as Toshiba plans to double hard-drive capacity for ¥60 billion

Seagate Technology was down 14.66% at $806.91 and Western Digital was down 13% at $402.41 at 10:51 a.m. Eastern on Friday, according to Nasdaq, after reports that Toshiba plans to double its hard-disk-drive production capacity for AI data centers. SanDisk, which makes flash memory rather than hard drives, was off 3.4%.

What Toshiba is doing

Toshiba will spend about ¥60 billion, roughly $380 million, to expand its hard-drive plant in the Philippines and double output by fiscal 2027, TrendForce reported, citing Nikkei. It is Toshiba's first major hard-drive investment in about five years. The new lines will make drives with up to 40% more capacity per disk, and Toshiba is aiming for 65-terabyte drives in mass production around 2030.

Investing.com reported that Toshiba holds just over 10% of the market measured by storage capacity and has a medium-term goal of 30%. Only three companies make hard drives at scale: Seagate, Western Digital and Toshiba. Before Friday, Seagate shares had gained about 240% this year and Western Digital about 170%, Investing.com said, on demand for cheap bulk storage to hold AI training data.

The number behind the number: the selloff is far bigger than the spending

Nasdaq lists Seagate's market value at about $184 billion and Western Digital's at about $145 billion. A 14.7% fall on the first and a 13% fall on the second takes out more than $25 billion and more than $18 billion respectively, whichever closing price the market value is based on. That is upward of $43 billion of value lost on news of a capital project worth about $380 million, more than 100 times the size of the check.

The market is not pricing the plant. It is pricing what a third supplier adding capacity means for pricing power in a market where Seagate and Western Digital have been able to sell drives years ahead.

The share arithmetic is also worth working through. If the market's total capacity were 100 units with Toshiba at 10, doubling Toshiba to 20 while the other two stood still would give it 20 of 110, or about 18%. That is an illustration, not a forecast, but it shows the Philippine expansion alone does not get Toshiba to its 30% goal. It would need more spending, or for its rivals to stop adding capacity.

Why timing matters more than the headline

Both US makers have already sold much of their output forward. TrendForce noted that Seagate has said the vast majority of its nearline drive capacity is allocated through 2028, and that Western Digital has committed most of its 2027 supply under long-term agreements, with parts of 2028 and 2029 covered. Toshiba's new capacity arrives in fiscal 2027.

So the near-term revenue picture for Seagate and Western Digital does not change on Friday's news. What changes is the bargaining position when the next round of long-term contracts is negotiated, because cloud buyers will have a third supplier with room to sell. That is the risk traders are pricing.

What traders are watching

• Volume: by 10:51 a.m., Seagate had traded about 6.2 million shares against a daily average of 4.2 million, and Western Digital 9.5 million against 7.1 million, per Nasdaq.
• Distance from the high: Seagate's 52-week high is $1,145, so Friday's price is about 30% below its peak even after this year's rally.
• Company responses: neither Seagate nor Western Digital had commented on Toshiba's plan in the reports we read. Their next quarterly reports, and any update on contracted capacity, are the next hard data point.

For the AI build-out that is driving storage demand, see our coverage of how investors are pricing hyperscaler debt and more stock news.

Sources: Investing.com; TrendForce, citing Nikkei; Nasdaq quotes and market data at 10:51 a.m. ET. Market-value and capacity-share calculations are ours. This is market information, not investment advice.