Toshiba Finalizes Deal For Fujitsu's HDD Business

The two companies on Thursday said that Fujitsu's business will be transferred to a new company, Toshiba Storage Device Corp., which is expected to eventually become a wholly owned subsidiary of Toshiba.

The deal, preliminary details of which were originally released in February, has a value of about $304 million.

Fujitsu on Thursday also said it plans to transfer its hard-disk media business, operated by Fujitsu subsidiary Yamagata Fujitsu Ltd., to Toshiba Storage Device Corp.

Fujitsu also said it is outsourcing its future chip production to Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC).

For Toshiba, the hard-drive deal is part of a plan to lay the foundation for a long-term expansion of its hard-drive business, said Scott Maccabe, vice president and general manager of the Toshiba Storage Business Division.

The deal will result in Toshiba eventually becoming the world's largest manufacturer of mobile hard drives, with both 1.8-inch and 2.5-inch models, Maccabe said. The combined company also has 2.5-inch and 3.5-inch enterprise hard drives, as well as optical drives, and both NAND and Flash storage technology for solid state drives, he said.

The new Toshiba does not produce classic 3.5-inch desktop hard drives, Maccabe said. However, the market is moving towards 2.5-inch drives for desktop use, which positions Toshiba well, he said.

The only overlap between the two companies' product lines is in the 2.5-inch mobile hard-drive market, which limits the amount of product line cuts the new Toshiba has to make, Maccabe said.

The two companies were already pretty lean in terms of personnel, but how many redundant positions will be cut is not yet certain, Maccabe said. "Toshiba and Fujitsu probably had the leanest structures in the hard-disk space," he said. "So combined, we're still more efficient than our competitors."

The transfer of Fujitsu's hard-drive business is expected to be finalized by July 1, 2009.