Western Digital Sells HDD Manufacturing to Toshiba

[Guest]

Western Digital (WD) and Toshiba announced that the two companies have reached an agreement under which WD will sell certain 3.5-inch manufacturing and distribution assets.

Western Digital Sells HDD Manufacturing to Toshiba : Read more

 

[scook9]

I do not normally complain about this....but the grammar was atrocious in this article....editors need to read it more than once before hitting publish....

 

[Lord Captivus]

Is this good or bad news for consumers?
Toshiba is going to prioritize their own computers, so if you like Toshiba I’m guessing its good news...mmm...maybe I should give back my business degree!

 

[JamesSneed]

wtf? The title is so misleading. Let me fix this for you.

"Western Digital to sell some equipment to Toshiba"

EDIT: Here is the real scoop which is exactly opisite of what the title makes it sound like.


http://www.marketwatch.com/story/toshiba-to-sell-thai-hdd-unit-to-western-digital-2012-02-28

http://www.reuters.com/article/2012/02/28/westerndigital-toshiba-idUSL4E8DS9II20120228

 

[4745454b]

Bad for us. Sounds like we are losing another hdd manufacturer.

 

[the_crippler]

Seems to be a constant back-and-forth between Seagate and WD...when one's good, the other is a risky purchase. Now that WD will have that Toshiba "quality," it looks like Seagate will be back to being the good bet.

 

[JohnnyLucky]

It has reached the point where I am confused about all of the acquisitions and trades.

 

[drwho1]

All I really want to hear is:

. Prices are finally back to Earthly Level
. HDD Manufactures have finally decided to stop the price gouge
. 5TB are now available for $100 dollars with NO limit per purchase.

Guess I will still have to keep waiting for a few years.

 

[Marcus52]

[citation][nom]scook9[/nom]I do not normally complain about this....but the grammar was atrocious in this article....editors need to read it more than once before hitting publish....[/citation]

There were a couple of typo errors - which shouldn't have made it through - and the title was misleading, but it is a vast overstatement to say the grammar was "atrocious".

 

[DRosencraft]

Alright, let me attempt to explain this for everyone. Western DIgital bought out Hitachi. Hitachi wasn't doing so hot, and Western Digital saw an opportunity to both eliminate a competitor and to take in some manufacturing capacity. However, part of the deal for WD taking over Hitachi is that they have to unload some part of thier assets in the interest of competition. Toshiba at the same time wants to get into the desktop and enterprise HDD market and need some of that tech. So, in exchange for giving WD even more manufacturing capacity (the Thailand facilities) Toshiba gets from WD the tech to build those 3.5" drives.

What does that mean for us consumers? Really, it probably works out as an even swap. We lost a desktop HDD maker with Hitachi getting bought out, but now Toshiba is going to start making desktop HDDs. There is room to be sceptical thoguh.

WD basically increased manufacturing capacity in the exact same area that got washed out last year, factories that were flooded in last year's floods. Ideally I woiuld think they would have been looking to move some operations somewhere else. If they get heavy rains again this year, then basically this new factory goes to waste.

On the other side, Toshiba hasn't had experience making 3.5" drives. Their 2.5" drives are good, but you'd be surprised how a company can mess up somethig that should be as simple as moving from 2.5" to 3.5". The fact that they were looking to buy the capability rather than developing it themselves should tell you something. They could have a number of different problems (quality, performance, reliability).

 

[velocityg4]

The big disappointment to me is Hitachi selling out to WD. Hitachi drives are the most reliable I have ever owned. They also are fast and run cool to the touch. Western Digital is decent but I suppose this is the end of the best hard drive manufacturer. Once can only hope WD makes use of some Hitachi processes and engineers to make their drives run cooler and more reliably.

At least it wasn't to Samsung. Every Samsung I have ever owned ran piping hot (hot enough to cause burns if held too long). They have all failed within a few months. I don't even know how they stay in the hard drive business.

 

[elbert]

Looks like WD is swapping some 3.5 inch HD production machinery for Toshiba's flood damaged 2.5 inch production plants in Thailand. WD is doing this to comply to EU's requirements to acquiring Hitachi Global Storage Technologies. This will also give WD a future increase in production of 2.5 inch drives. This is one very smooth move on Western Digital's part.

 

[back_by_demand]

[citation][nom]velocityg4[/nom]The big disappointment to me is Hitachi selling out to WD. Hitachi drives are the most reliable I have ever owned. They also are fast and run cool to the touch. Western Digital is decent but I suppose this is the end of the best hard drive manufacturer. Once can only hope WD makes use of some Hitachi processes and engineers to make their drives run cooler and more reliably.At least it wasn't to Samsung. Every Samsung I have ever owned ran piping hot (hot enough to cause burns if held too long). They have all failed within a few months. I don't even know how they stay in the hard drive business.[/citation]

You realise that TSST is Toshiba Samsung Storage Technology, who already produce optical drives, so they aren't that far apart

 

[sonofliberty08]

toshiba should buy hitachi in the first place

 

[jay2tall]

Samsung... Now WD... I hope their quality doesn't suffer.

 

[jaber2]

Will there be HDD after SSD take over? I am guessing SSD prices will go down once WD and others decided HDD cost too much to keep up and support, at that point I also predict many small SSD manufacturers will be swallowed up by the big HDD manufactures.

 

[captaincharisma]

hitachi wasn't that widely known anyway the only time i seen one of there hard drives was in my playstation 3 and on a few tech sites

 

[LordConrad]

WTF?? Why would Western Digital want to purchase Toshiba's Thailand facilities? They should move more of their production to other countries. Didn't the flood teach them anything?

 

[gm0n3y]

What a horribly misleading title.

 

[matt_b]

[citation][nom]JamesSneed[/nom]wtf? The title is so misleading. Let me fix this for you. "Western Digital to sell some equipment to Toshiba"[/citation]
This is what I gather, but certainly not from the title.
In the end, why did WD buy HGST again? Looks like this new deal with Toshiba, WD practically gains nothing and will end up in a not that much better position than they were before the HGST deal.

 

[mrmike_49]

[citation][nom]gm0n3y[/nom]What a horribly misleading title.[/citation]

really! totally sleazy tabloid type of title!!!

so is Douglas Perry to blame?

 

[pedro_mann]

[citation][nom]DRosencraft[/nom]Alright, let me attempt to explain this for everyone. Western DIgital bought out Hitachi. Hitachi wasn't doing so hot, and Western Digital saw an opportunity to both eliminate a competitor and to take in some manufacturing capacity. However, part of the deal for WD taking over Hitachi is that they have to unload some part of thier assets in the interest of competition. Toshiba at the same time wants to get into the desktop and enterprise HDD market and need some of that tech. So, in exchange for giving WD even more manufacturing capacity (the Thailand facilities) Toshiba gets from WD the tech to build those 3.5" drives. What does that mean for us consumers? Really, it probably works out as an even swap. We lost a desktop HDD maker with Hitachi getting bought out, but now Toshiba is going to start making desktop HDDs. There is room to be sceptical thoguh. WD basically increased manufacturing capacity in the exact same area that got washed out last year, factories that were flooded in last year's floods. Ideally I woiuld think they would have been looking to move some operations somewhere else. If they get heavy rains again this year, then basically this new factory goes to waste. On the other side, Toshiba hasn't had experience making 3.5" drives. Their 2.5" drives are good, but you'd be surprised how a company can mess up somethig that should be as simple as moving from 2.5" to 3.5". The fact that they were looking to buy the capability rather than developing it themselves should tell you something. They could have a number of different problems (quality, performance, reliability).[/citation]
Your comment has been one of the best explanations I have seen so far. It looks like most journalists have a very fussy grasp on the concept they are reporting on, around the board.

The only point I might add is that I think Toshiba needed this agreement due to patent issues. I don't think the jump from 2.5" to 3.5" didn't come without the encumbering patent issues that plague our society.

 

[belardo]

The whole things sounds stupid. Lets buy out a competitor, but have to sell off assets to another one.

So why bother?

 

[zachusaman]

yay, western digital is putting all its eggs in a single flooded basket, wooooo!!

 

[Guest]

The reason Hitachi Ltd. was trying to sell HGST is simply that they are desperate to put themselves back in the black, they are eager to sell their volatile high-tech industry holdings in favor of more stable heavy industry, medicine, etc., and HGST is actually doing very well in recent quarters (consistent growth, good profit over several quarters, industry leading gross margin, growing market share, etc.). Since the HDD industry tends to have pretty steep ups and downs, it was imperative for Hitachi Ltd. to sell their storage division now (when they could get a good price for it) rather than later.

The ~$4.5b price they were able to get is very good, especially when you consider that the market capitalization of the much larger Seagate is only around 4b. If Hitachi Ltd. had instead tried to IPO their storage company, they would not get anywhere near as much as what WD was offering.

The only reason WD was willing to pay so much is for the immense value of eliminating a major competitor, and to give themselves a leg-up in the enterprise sector where they are not a big player (and Seagate is). Additionally, with only 2 major players remaining, it should be understood that there would be less competitive pressure and more potential to cooperate & coordinate pricing between the two major companies remaining.

At any rate, Chinese Ministry of Commerce essentially killed the deal earlier today, by "conditionally approving" the merger under terms so stringent that it would essentially be no merger at all (requiring HGST to be operated as an entirely independent business, retaining is current brand, manufacturing plants, independent finance, administration, R&D, with no sharing of company information between WD and HGST...all for a period of 2 years after which WD could only appeal to MOFCOM for a re-investigation and hope that they change their mind). Further, MOFCOM gives WD only 1 week to send them proposals for meeting such requirements.

Since there is a March 7 deadline for the deal to close (else either WD or Hitachi Ltd. can walk away or re-negotiate, and WD must pay ~$250m to Hitachi either way), this seems to be China's way of essentially saying "No". Frankly, it seems that given these highly strict conditions, WD has no real incentive to go through with the deal (especially for such a steep price). It will be interesting to see how they proceed.