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Toshiba will acquire part of Western Digital's 3.5-inch HDD (hard-disk drive) production equipment and related intellectual property, in return for the Japanese IT vendor's 2.5-inch HDD manufacturing facility in Thailand.
"The purchase of part of Western Digital's 3.5-inch HDD manufacturing equipment, and with it the capability to produce 3.5-inch HDDs for desktop PCs, DVR and other consumer applications, will expand Toshiba's portfolio and enable the company to supply products covering all segments of the HDD market," the company said in its statement released Wednesday.
It added that in return, Western Digital will acquire Toshiba Storage Device (TSDT)--the company's wholly-owned HDD manufacturing subsidiary located in Thailand--including the principal assets of TSDT, its Thailand property, facilities, and employees.
According to Bloomberg, Toshiba spokesperson Toru Ohara said the company intended to double sales of memory devices including hard drives to 800 billion yen (US$9.8 billion) in the year, ending in March 2015, from about 400 billion yen this business year.
Toshiba expects the global market for HDD and other storage devices to see sustained demand growth. [The market would be] driven by the continued diversification of devices requiring storage, including PCs, tablets and smartphones, and the explosive increase in data storage and archiving that will accompany cloud computing," it added in its statement.
The Japanese vendor and Western Digital aim to complete the acquisition and transfer by March this year after obtaining approval from the relevant authorities.
Western Digital, based in California, is divesting the equipment to address regulatory concerns over its planned acquisition of Hitachi Global Storage Technologies, the company said in its statement.
The deal also comes as the HDD manufacturing industry in Thailand recovers from major flooding in the country last year, which rattled the global supply chain.
Toshiba Signs Agreement with Western Digital on Acquisition of HDD Manufacturing Equipment and Transfer of HDD Manufacturing Facility
29 Feb, 2012
TOKYO—Toshiba Corporation (TOKYO: 6502) today announced that it has entered into a definitive agreement with Western Digital Corporation (NYSE: WDC) on Toshiba's acquisition of certain of Western Digital's 3.5-inch HDD manufacturing equipment and related intellectual property, and the transfer to Western Digital of Toshiba Storage Device (Thailand) Co., Ltd. (TSDT), Toshiba's wholly-owned HDD manufacturing subsidiary located in Thailand.
Toshiba and Western Digital aim to complete the acquisition and transfer by March of this year after obtaining approval from the relevant authorities.
Under the agreement, Toshiba will acquire the following equipment and intellectual property from Western Digital.
1) Manufacturing equipment for 3.5-inch HDDs for use in desktop PCs and other consumer applications, plus related intellectual property; and
2) Manufacturing equipment for near-line  HDDs for server applications.
Toshiba also has agreed to transfer to Western Digital its entire shareholding in TSDT.
Toshiba's acquisition of assets from Western Digital and the transfer of TSDT to Western Digital are subject to Western Digital's completion of its pending acquisition of Hitachi Global Storage Technologies and regulatory approvals from the relevant antitrust authorities.
The global market for HDD and other storage devices is expected to see sustained demand growth, driven by the continued diversification of devices requiring storage, including PCs, tablets and smartphones, and the explosive increase in data storage and archiving that will accompany cloud computing.
Toshiba acquired Fujitsu Limited's HDD business in 2009, expanding its product portfolio of small form factor HDDs for mobile applications with Fujitsu's enterprise HDDs. Since then, the company has developed a line-up of storage products for enterprise applications. More recently, in July 2011 Toshiba unified the Semiconductor Company and the Storage Products Company, covering NAND flash memories, SSDs and HDDs, and is now positioned to carry out coordinated sales promotions to a wide range of customers.
The purchase of part of Western Digital's 3.5-inch HDD manufacturing equipment and with it the capability to produce 3.5-inch HDDs for desktop PCs, DVR and other consumer applications, will expand Toshiba's portfolio and enable the company to supply products covering all segments of the HDD market. It will also expand Toshiba's supply capacity in the market for near-line HDDs, which is expected to expand with the continuing growth of the server market, further reinforcing a strategic segment of the company's HDD business.
Toshiba will transfer the shares of TSDT to Western Digital and consolidate HDD production at its two HDD manufacturing facilities in the Philippines and a contract manufacturer in China. A key goal is to further enhance cost competitiveness by boosting manufacturing efficiency.
Following the reinforcement of its HDD businesses through this re-organization, Toshiba aims to establish itself as the leading provider of integrated storage solutions–the company that has all three key storage solutions: NAND flash, SSD and HDD.
Outline of Toshiba Storage Device (Thailand) Co., Ltd.
|Address:||Pathun Thani, Thailand|
|Paid-in capital:||1 billion baht|
|Main business:||Manufacture of 2.5-inch HDD|
- Note: Near-line storage is a sort of data storage supporting large capacity storage, while on-line storage is appropriate for frequent access. It features generally higher reliability than HDDs for desktop PC applications.