Shares of Western Digital Corporation (WDC) fell 11.07% to $411.33 on Friday after Toshiba outlined a major expansion of its hard disk drive (HDD) production capacity. The planned investment increases competitive pressure across the fast-growing data-center storage market, where Toshiba is seeking to strengthen its position as artificial intelligence workloads drive demand for high-capacity hard drives. The decline came despite recent results that have been powered by strong cloud demand.

Toshiba Plans Its Largest HDD Investment in Five Years

Toshiba plans to invest approximately 60 billion yen, or $380 million, to expand HDD production in the Philippines. The project would double production capacity by fiscal 2027 and marks the company's largest HDD investment in five years. As part of the expansion, Toshiba also plans to produce drives offering as much as 40% more storage capacity. Because the added capacity is slated to come online by fiscal 2027, the new supply would reach the market over a multi-year horizon rather than immediately.

Toshiba currently holds just over 10% of the HDD market when measured by storage capacity, and the company aims to lift that share to 30% over the medium term. Reaching that target could intensify competition for Western Digital and Seagate in large enterprise storage contracts.

By storage capacity, Western Digital and Seagate each control more than 40% of the worldwide HDD market, according to industry estimates. Measured through unit shipments, Toshiba holds roughly 17%. Toshiba's planned expansion could narrow the capacity gap between the three major HDD suppliers.

Western Digital Faces Stronger Data Center Competition

Western Digital now focuses heavily on hard drives following its separation from SanDisk, a structure that leaves the company more exposed to shifts in enterprise storage demand and HDD pricing. Toshiba's expansion therefore presents a direct competitive challenge within Western Digital's core business.

The company generated $3.75 billion in fiscal fourth-quarter revenue, representing 44% annual growth. Cloud customers accounted for 89% of total sales during the period, a contribution that placed cloud revenue near $3.3 billion as demand for large-capacity drives remained strong.

High-capacity enterprise drives have become increasingly important as data centers expand their artificial intelligence infrastructure. Operators need large storage systems to house training data, system logs, backups, and inference outputs. HDD manufacturers have benefited because these workloads often require inexpensive storage rather than the fastest possible access.

AI Storage Demand Supports Long-Term HDD Growth

Artificial intelligence continues to increase the amount of information created and stored across global data centers. IDC estimates that annual worldwide data generation could reach 718 zettabytes by 2030, a level representing about four times the amount of data generated during 2024.

HDDs could store around 60% of that future data thanks to a cost profile that remains significantly below solid-state storage. SSDs currently cost roughly 20 times more than HDDs for comparable storage capacity, and tight memory supplies have further increased demand for conventional hard-drive storage.

Toshiba's product roadmap reflects that outlook. The company plans to pursue 65-terabyte-class drives by 2030 and eventually to develop 100-terabyte-class products. Toshiba also intends to automate inspection and clean-room processes at its expanded Philippines facility, changes that could reduce additional staffing needs by around 40% while supporting higher production volumes.

Western Digital shares fell $51.23 during Friday trading as the Toshiba report weighed on the HDD sector, and Seagate shares also declined as the market assessed potential changes in industry supply and competition. Toshiba's capacity expansion now adds another factor to a storage market already benefiting from rising AI demand. For Western Digital, whose revenue leans heavily on cloud customers, the development lands in a market that has lately been a source of growth rather than pressure. The industry's next checkpoints are concrete: new capacity at the Philippine plant due by fiscal 2027, Toshiba's 65-terabyte-class drive target for 2030, and the suppliers' market-share readings along the way.

Source: Blockonomi