Western Digital cuts back on investments ahead of Hitachi acquisition

In an attempt to mitigate antitrust concerns over its acquisition of Hitachi’s hard disk drive business, Western Digital says it will pull back certain industry-related investments, granting competitor Toshiba some leeway in its ability to sell products to businesses and consumers.

According to Western Digital, the pending deal will allow Toshiba to sell a line of 3.5-inch HDDs for use in the general consumer electronic market as well as improve its ability to target businesses with the same model. The agreement hinges on regulatory approval of Western Digital’s $3.5 billion buyout of Hitachi GST, announced last March. The company believes it will receive that approval next month.

Ironically, Western Digital also revealed it would purchase Toshiba’s HDD manufacturing Storage Device Company Limited located in Thailand. The plant was hit hard by flooding last fall and has yet to renew operations, making it an odd selection for a company that’s already seen its fortunes turn for the worse due to heavy reliance on the country’s HDD output.

Western Digital continues to struggle after its HDD shipments catastrophically fell by nearly 50 percent last quarter. The majority of the drop-off can be chalked up to water-logged Thai factories and severely constrained supply lines. Rival Seagate, which closed its acquisition of Samsung’s HDD division in December, has become the new market leader by default.