Fujitsu Finalizes HDD Assets Transfer to Toshiba

Device makers Toshiba and Fujitsu said May 2 that they have finalized details on an agreement for Toshiba to take over Fujitsu's multinational hard-drive design and manufacturing businesses.

Financial details of Toshiba's buyout were not disclosed by either company.

The combination of the two companies' 2.5-inch hard-drive market sales figures would immediately make it the largest such supplier in the market for laptop and netbook computers, according to industry analysts.

The deal provides Toshiba with an immediate entry into the enterprise HDD market, which it has coveted for years.

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Fujitsu is dividing up its hard drive design and manufacturing assets into four new companies, all to be owned and operated by Toshiba.

Fujitsu's hard drive business will be transferred to a newly created umbrella company, Toshiba Storage Device Corp., the company said.

Fujitsu's manufacturing subsidiaries, Fujitsu Computer Products of the Philippines and Fujitsu Co., Ltd. of Thailand, will become Toshiba Storage Device (Philippines) and Toshiba Storage Device (Thailand), Ltd.

Another HDD-related business, Yamagata Fujitsu Limited, will become Toshiba Storage Device Yamagata. Upon completion of the transfer, these three companies will become wholly owned subsidiaries of Toshiba Storage Device Corp.

The agreement follows a memorandum of understanding signed by the companies on Feb. 17, 2009. The companies aim to complete the business transfer by July 1, 2009.

About 90 percent of the market for 2.5-in. laptop and netbook hard drives is supplied by Hitachi, Western Digital, Fujitsu, Hitachi, Seagate, Toshiba and Samsung. For the last couple of years, Fujitsu has been third in number of units shipped behind Hitachi and Western Digital, according to industry analysts.

In 2008, Hitachi shipped 50.4 million 2.5-inch HDDs and Western Digital 50.3 million to lead the market, followed by Fujitsu's 38.6 million. Toshiba was fourth with 34.5 million, and Seagate reported 29.8 million units shipped.

The combination of Toshiba's and Fujitsu's 2008 2.5-inch HDDs-shipped figures is 73.1 million, easily eclipsing No. 1 Hitachi's market-leading numbers.

After the transfer, Toshiba will handle the sales and marketing of all HDD products, including Fujitsu's, and entrust all aspects of design, R&D, quality assurance, production technology, and technology support to TSDC.

Fujitsu's sales and marketing offices outside of Japan, with the exception of some offices in certain regions, will be transferred to Toshiba's overseas business operations.

Toshiba said it will use its new Fujitsu assets to enter the enterprise HDD business for server and data storage system applications, where Fujitsu is currently a leader.

This addition of the Fujitsu assets also will allow Toshiba to continue to develop its enterprise solid-state drive business, the company said.