Shares of Western Digital and Seagate Technology rebounded Tuesday after analysts said Toshiba's plans to expand its flash memory output pose little near-term threat to the two dominant hard drive makers, easing investor concerns that sent both stocks lower earlier in the week.
The selloff began after Toshiba signaled it would roughly double production capacity at its NAND flash manufacturing operations, a move that raised fears of a supply glut and price pressure across the storage industry. Analysts pushed back on that reading, noting that even a doubling of Toshiba's capacity would leave it well short of the combined scale of Western Digital and Seagate in the markets that matter most to their revenue.
Western Digital holds a majority stake in the flash memory joint venture it operates with Toshiba's former chip unit, Kioxia, which complicates any effort by Toshiba to compete directly against it. The two companies share fabrication plants in Yokkaichi, Japan, and Western Digital has argued in the past that Toshiba cannot unilaterally expand capacity without its partner's consent.
Seagate, meanwhile, generates the bulk of its revenue from conventional hard disk drives used in data centers, a market where Toshiba's flash ambitions are largely irrelevant. Seagate and Western Digital together control roughly 80% of the global HDD market, a duopoly that has survived decades of predictions about flash memory rendering spinning disks obsolete.
The storage sector has been riding a wave of demand from cloud providers building out artificial intelligence infrastructure, which has tightened supply of high-capacity drives and lifted prices. Western Digital reported revenue of $4.1 billion in its most recent quarter, while Seagate posted $2.3 billion, both beating Wall Street estimates on the strength of data center orders.
Toshiba has not disclosed a timeline for its expansion or a specific dollar figure for the investment. Building new NAND fabrication lines typically takes two to three years and costs billions of dollars, a lead time that gives incumbents room to adjust.
Analysts at several firms maintained buy ratings on both stocks following the pullback, arguing the market overreacted to Toshiba's announcement. The episode mirrors a pattern from 2018, when fears of Chinese memory chip entrants pressured storage stocks before those competitors struggled to achieve scale.
Western Digital shares closed up 3.2%, while Seagate gained 2.7%, recovering most of the prior session's losses.
