Seagate and Western Digital suffered double-digit losses on Friday after a report that Toshiba plans to spend about ¥60 billion, or roughly $380 million, to double hard-disk drive production capacity for AI data centers.
Seagate closed October 2 at $807.62, down 14.59%, while Western Digital finished at $400.07, down 13.51%. The declines became substantially steeper after the morning session, when Seagate had been down about 10% at $849.79 and Western Digital about 7% at $429.45.
The selloff was unusually concentrated. The S&P 500 gained 0.73% on Friday and the Nasdaq Composite rose 1.19%, while the two hard-drive manufacturers were among the day’s sharpest technology decliners.
The immediate catalyst cited across Friday’s reports was a Nikkei Asia report that Toshiba plans to double production capacity for hard-disk drives used in AI data centers by fiscal 2027.
Toshiba Wants 30% of HDD Capacity
According to the Nikkei report, Toshiba plans to invest around ¥60 billion in the expansion, with its manufacturing operation in the Philippines serving as the main production hub.
Toshiba currently has just over 10% of the HDD market when measured by storage capacity, according to Nikkei, but is targeting a medium-term share of around 30%.
That would put considerably more supply into a market dominated by Seagate and Western Digital at a time when both companies have been telling investors that scarcity is helping them raise prices.
Western Digital Chief Executive Irving Tan described the dynamic on the company’s August earnings call: “In the very tight supply environment that we’re in, that provides us an opportunity for increased pricing leverage as well.”
Seagate CEO Dave Mosley made a similar point in April when discussing industry capacity, saying, “The total number of units is not really increasing.”
Toshiba’s reported investment challenges exactly that part of the investment case. It does not mean supply becomes loose immediately, but it introduces the prospect of a larger third competitor adding output into a market where restrained unit growth has supported pricing.
Western Digital and Seagate Had Already Priced In Tight Supply
The reaction also reflects how far both stocks had already run on the AI storage theme.
Yahoo Finance’s morning analysis put Seagate up roughly 210% year to date before Friday’s decline and Western Digital up about 150%. Even after the selloff, both remain among the most dramatic beneficiaries of the buildout in storage infrastructure required by AI data centers.
Western Digital is now especially exposed to that HDD cycle following the separation of SanDisk. FinanceFeeds’ September analysis of Western Digital’s bull and bear cases highlighted how much of the stock’s valuation depends on durable pricing, cloud demand and tight industry capacity.
The same analysis noted that Western Digital’s top 10 customers accounted for 73% of fiscal 2026 revenue and that three customers alone represented 44%. That concentration can amplify the benefits of strong hyperscaler demand, but it also makes changes in storage procurement and pricing unusually important to the stock.
Friday’s decline is therefore not simply a reaction to another manufacturer spending $380 million. The market is reassessing one of the assumptions that helped drive the rally: that growing AI storage demand would meet a supply base expanding slowly enough to preserve pricing leverage.
Analysts Question Whether Toshiba Can Actually Double Industry Supply
Later on Friday, analysts pushed back against the most bearish interpretation of the Toshiba report.
Citi analyst Asiya Merchant argued that Toshiba’s announced expansion may have a limited effect on global HDD availability because Toshiba relies on outside suppliers for important components including media and recording heads. Those suppliers would have to expand alongside Toshiba for the company to translate additional assembly capacity into twice as many completed drives.
LYNX Equity Strategies similarly argued that the investment may not materially close the global supply shortage and suggested the spending could partly reflect Toshiba’s desire to secure Japanese supply rather than an attempt to aggressively take global share.
That distinction will matter because capacity announcements and actual shipping capacity are not the same thing. Seagate and Western Digital also have long-term agreements with large cloud customers, giving them some protection if Toshiba’s expansion takes time to reach volume production.
The Storage Trade Is Splitting Again
Friday’s move was also different from the broader semiconductor selloff seen in September.
FinanceFeeds reported last month that SanDisk and other memory names fell sharply as investors questioned the pace of AI infrastructure spending. That episode hit multiple parts of the semiconductor supply chain at once.
This time, the pressure was centered much more directly on hard drives. SanDisk was comparatively resilient while Seagate and Western Digital absorbed the largest losses, reinforcing that investors were reacting to the HDD supply outlook rather than abandoning the entire AI storage theme.
The next question is whether Toshiba’s ¥60 billion plan actually changes industry pricing. If component constraints prevent it from doubling effective output, Friday’s selloff may ultimately have run ahead of the fundamental impact. If Toshiba can reach its targeted 30% share of HDD storage capacity, however, the tight-supply argument that helped turn Western Digital and Seagate into two of 2026’s strongest AI trades becomes harder to defend.
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