Toshiba may buy Fujitsu's hard-disk drive business to emerge as top manufacturer in the world

14 January 2009

Japan's Toshiba confirmed media reports it is talking with Fujitsu about buying Fujitsu's hard-disk drive business. In a brief statement Toshiba said, "while the companies involved are in negotiations, nothing has been decided yet." The value of the deal is reported to be 30 to 40 billion yen ($333 to $444 million).

Toshiba held a 7.2 per cent share of the $32.8 billion global market for hard drives in 2007, making it the fifth-biggest producer, followed by Fujitsu with 6.9 per cent, according to data from iSuppli Corp. Seagate Technology, Western Digital Corp. and Hitachi Ltd. are the world's top three makers, based on the data.

A deal would make Toshiba the world's biggest supplier of small hard drives, the Nikkei newspaper reported. Top executives at Toshiba and Fujitsu were expected to meet within a week, and if they reach an agreement, a deal could be announced by the end of this month.

Fujitsu, meanwhile, is considering selling its remaining hard-drive operations to other companies and may withdraw from the business altogether, the report said. This decision may have been prompted by intense competition in the hard-disk drive segment.

In the fiscal first-half of the year ended Sept. 30, Fujitsu's ubiquitous product solutions division, of which hard disk drive business is a part, reported a 4.2 per cent decline in sales to 521.4 billion yen ($5.79 billion). However, the division's operating income slumped to 8.8 billion yen from 21.8 billion yen in the year-earlier period, while operating income margin slid to 1.7 per cent from 3.8 per cent.

Elaborating on the half-yearly performance, Fujitsu had said that even excluding the impact of a strong yen, division "sales decreased by 9 per cent, primarily as a result of the impact of intensified competition in hard disk drives as well as in Europe's personal computer market."