Investing.com — Shares of Seagate Technology (NASDAQ) fell 11% on Friday, while those of Western Digital (NASDAQ) fell 7%, after a report that Toshiba plans to significantly increase its hard drive production capacity to meet growing demand from AI data centers.
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According to Nikkei, Toshiba plans to invest around 60 billion yen ($400 million) to double its hard drive production capacity by fiscal 2027. The expansion will be centered on the company’s plant in the Philippines and aims to meet the rapidly growing demand for storage from AI infrastructure.
The hard drive market is dominated by three companies: Seagate, Western Digital and Toshiba. Toshiba currently represents just over 10% of the market in terms of capacity, according to Nikkei, but has set a mid-term goal of reaching a 30% share.
The planned expansion raises concerns about intensifying competition in an already concentrated market. Toshiba’s ambitions would put it in a stronger position to compete with Seagate and Western Digital in the growing AI data center storage market, which could put pressure on market share and pricing.
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The reaction also comes after a massive rally in both stocks this year, making them particularly susceptible to any signs that competition could intensify. Seagate shares had gained about 240% this year before Friday’s decline, while Western Digital was up about 170%.
The sharp rise raised the bar for stocks, making news likely to challenge the sector’s favorable supply-demand dynamics more likely to trigger profit-taking.
The news comes as investors increasingly focus on the storage needs of AI infrastructure. While spending by hyperscalers and data center operators is expected to generate substantial demand for hard drives, a significant increase in Toshiba’s capacity could provide customers with more supply options as the market grows.
SanDisk (NASDAQ), which is also exposed to the data storage market, fell about 1% following the report.
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