Toshiba sets sights on Fujitsu’s HDD business

The deal between Western Digital and Fujitsu may be dead, but media reports from Japan indicate Toshiba and Fujitsu are in final talks for Toshiba to buy the Fujitsu hard disk drive unit for $333 to $444 million.

Toshiba is interested in acquiring Fujitsu’s HDD manufacturing plants in Thailand and the Philippines, both companies said in a joint statement.  Fujitsu’s HDD business unit has struggled while competition between manufacturers in the United States, South Korea and Japan continues to increase — Fujitsu spokespeople previously admitted losses will continue to grow if the company keeps its HDD business.

In the fiscal year ending in March 2009, Fujitsu expects the HDD business to lose at least $107.5 million.

If the deal is finalized, Toshiba will become the largest supplier of small HDDs in the world, which would make it easier to compete with Seagate and others.  The deal between the two companies makes sense, as Toshiba would be able to expand a profitable business while Fujitsu is able to rid itself of the struggling business unit.  A deal is expected before the end of the month. 

Furthermore, Fujitsu is well known for creating HDDs used in portable devices, such as mobile phones and laptops, which would greatly benefit Toshiba in the future.

If the deal does not pan out, Fujitsu reportedly has several other companies interested in its HDD unit.