Western Digital to Buy Fujitsu's HDD Business Unit

Western Digital, one of the leading makers of hard disk drives, is reported to be in talks with competitor Fujitsu for the acquisition of the latter's unprofitable hard drive business, according to a source inside the company. This transaction could allow Western Digital to claim the leading position in the hard drive market, currently occupied by Seagate Technology.

 

At the moment, Western Digital holds the number two spot in the hard disk driver market, while Fujitsu's HDD business unit ranks in at 6.

According to Japan's Nikkei news service, Fujitsu is planning to sell all of its plants, including those in Japan, Thailand and the Philippines, for a price that ranges from 70 billion yen to 100 billion yen, which is approximately $660 million to $944 million. One of the main reasons behind Fujitsu's business decision is that its current HDD unit is not performing too well, having even recorded some loses.

 

Based on these numbers, Nikkei reports that this would be one of the largest business unit sell-offs for a Japanese electronic company ever. The deal is expected to be finalized even before the end of 2008, although none of the company's representatives has confirmed the Nikkei story. “There is no truth at this time to the Nikkei report concerning our hard drive business,” Fujitsu said in a statement.

 

Although the report hasn't been confirmed by either of the two storage makers, it did leave a mark on the evolution of market, as Fujitsu's share price went up 3.3 percent, to 620 yen.

 

Reports of Fujitsu's HDD business being unprofitable are explainable in a context in which strong market competition allows for lower and lower prices for HDDs. In addition, SSDs are becoming increasingly popular and more attractive, somehow forcing leading HDD makers to reconsider their business strategy and to adopt the flash-based storage solutions instead. However, neither Seagate nor Western Digital has expressed clear intentions of turning to SSDs anytime in the near future.