Western Digital shares fall on Toshiba expansion news

Western Digital shares experienced a significant decline on Friday, dropping between 10% and 11.7% amid reports regarding competitor expansion. The selloff appears driven by news that Toshiba plans to invest approximately $380 million to $400 million to double its hard disk drive (HDD) production capacity by fiscal 2027.

Toshiba intends to focus this capital expansion on its factories in the Philippines, specifically targeting the high-growth market for hard-disk storage required for artificial intelligence services. This move could potentially increase Toshiba's market share from roughly 17% toward 30%, challenging the current market dominance of Western Digital and Seagate Technology, who each hold approximately 40% of the market.

While the expansion poses risks of increased price competition and potential pressure on profit margins, some analysts suggest the selloff may be excessive. They note that demand for high-capacity HDDs remains robust among cloud providers and AI data centers, and Western Digital's recent fiscal performance showed significant year-over-year revenue growth.