Shares of Western Digital WDC and Seagate Technology rebounded on Monday as analysts assessed the potential impact of Toshiba’s plans to expand hard disk drive (HDD) production.
Western Digital shares rose 6.8% in Monday afternoon trading, while Seagate gained 5.9%.
Both stocks had fallen sharply on Friday after a Nikkei Asia report highlighted Toshiba’s potential plans to significantly increase its HDD production capacity.
Analysts said the expansion could add to supply but argued that it is unlikely to materially change the HDD market’s supply-demand balance in the near term.
Analysts say Toshiba capacity increase may not overwhelm market
TD Cowen analyst Krish Sankar said that while the prospect of Toshiba doubling its exabyte capacity “sounds bearish” for US storage makers, the underlying figures are less concerning.
Sankar estimated that Toshiba’s expansion could add about 75 exabytes of incremental supply.
That would leave the company with around 15% to 17% of the overall HDD market, he said, while the industry currently faces a shortage of about 300 exabytes.
The estimate also does not account for Sankar’s expectation that demand for digital storage capacity will grow by about 30% annually in 2027 and 2028.
As a result, Sankar described Toshiba’s capacity additions as “a natural response to tightness” rather than an indication of future excess supply.
Bernstein similarly said Toshiba’s announcement had been misunderstood.
The research firm noted that the company is targeting nearly double its production capacity by fiscal 2027, which ends in March 2028, rather than immediately doubling its share of the global HDD market.
If Toshiba doubles its exabyte output while Western Digital and Seagate each increase shipments by 25%, in line with their long-term plans, Toshiba’s share of exabyte capacity would rise from 11.2% to 16.8%, Bernstein estimated.
The firm described the potential increase as “significant” but “isn’t that alarming” and reiterated its Outperform ratings on both US storage companies.
Toshiba faces a lengthy capacity ramp
The potential competitive threat also remains several years away.
Sankar said doubling Toshiba’s exabyte production could take about two years, based on a 12-month wafer cycle and another 12 months to build production capacity and install manufacturing equipment.
He also noted that customers appear “skeptical about [the] capacity ramp trajectory for Toshiba”, pointing to previous instances in which the company fell short of production targets.
Western Digital and Seagate are also advancing their product roadmaps, potentially allowing them to extend their lead while Toshiba adds capacity.
Sankar said the US companies can supply some of their own components, while Toshiba will need to rely on other suppliers.
Evercore ISI analyst Amit Daryanani also highlighted the component issue.
He said Toshiba would need to “materially outgrow the market”, which he expects to expand by at least 25%, while securing enough components and qualifying higher-capacity products with customers.
Analysts expect HDD supply to remain tight
Daryanani said Toshiba’s planned $380 million investment to expand HDD manufacturing in the Philippines would still fall short of adding a meaningful amount of exabyte capacity.
Citi analysts also said Toshiba’s expansion was unlikely to materially ease the HDD supply shortage, noting that the industry is currently under-shipping unconstrained demand “by a wide margin”. T
he analysts recommended buying Western Digital and Seagate following Friday’s selloff.
Morgan Stanley likewise said the supply-demand gap through calendar 2028 is expected to remain wider than Toshiba’s potential capacity expansion.
The firm also noted that Toshiba lacks leading-edge capacity and HAMR technology.
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