Fujtisu Sells HDD Business To Toshiba

Although we heard rumors last month, Fujitsu officially announced that Toshiba will be buying its hard disk drive (HDD) business.  The move comes shortly after Fujitsu announced that it will cease production of HDD heads.

The transfer between the two companies is expected to be completed in the first quarter of fiscal 2009. The transfer will take place with Fujitsu creating a new company consisting of its HDD-related businesses and functions, which Toshiba will than take an 80-percent stake in.  Fujitsu will initially retain a 20-percent stake in the new company to help provide for a smooth transfer, but Toshiba will eventually gain full ownership.  The new company will be a subsidiary company of the Toshiba Group. 

Toshiba hopes that the purchase of Fujitsu's HDD business will help strengthen its 2.5-inch and smaller HDD business, as well as give Toshiba entry into the enterprise HDD market.  Fujitsu is currently a leader in the enterprise HDD market and a growing demand for such data storage systems is expected.  Toshiba's entry into the enterprise HDD market will also give the company an opportunity to bring its own SSD technology into the enterprise market, fusing Fujitsu's enterprise HDD technology with its own SSD technology. Toshiba is aiming to capture over 20-percent of the overall HDD market by 2015. 

Fujitsu also announced that it will be selling its HDD media business to Showa Denko K.K., with the transfer to be complete by April-June of 2009.  Fujitsu's HDD media business is responsible for the manufacturing of aluminum media used in server HDDs and for the development and manufacturing of glass media used in compact notebook HDDs.  Showa Denko is the world’s largest independent vendor of HDD media and the company's purchase of Fujitsu's HDD media business will help strengthen its media offerings for server drives. The move will also give Showa Denko direct access to the HDD-related intellectual property, knowledge and development capabilities held by Fujitsu. 

Fujitsu posted a revised consolidated earnings projections for FY 2008, with it now stating a net loss projection of 50 billion yen ($544M), compared to the previous net loss projection of 20 billion yen ($217M). The company's full year net sales and operating cost projections remained unchanged though.  Fujitsu had a net income of 48.1 billion yen back in FY 2007.