HDD Bubble: After selling its recording media business to Imation, TDK is now mostly focused on sensors, power supplies, and other advanced electronic devices. HDD magnetic heads, one of TDK's remaining business interests, could soon find a new home with a major hard drive manufacturer.
According to sources familiar with the matter, Seagate and Toshiba are currently battling each other to acquire TDK's magnetic-head business. The Japanese company is one of the few independent manufacturers still making this crucial electronic component, but HDD giants are now looking to strengthen their supply chains as the entire magnetic-recording industry goes through a second, AI-fueled renaissance.
The unnamed sources said that Toshiba began talking with TDK earlier this year, while Seagate made a higher offer during the summer. While the exact amount is still up in the air, the acquisition is expected to be worth a few billion dollars. The winning bidder would gain TDK's HDD magnetic-recording head production, strengthening its hard drive business for years to come.
Seagate, Toshiba, and Western Digital are the three major HDD manufacturers still in business today, after market and technological evolution turned the industry upside down over the past few decades. Both Seagate and WD have their own in-house magnetic-head production lines. Toshiba relies on external partners such as TDK to put its HDD units together.
Losing TDK's support would be highly detrimental to Toshiba's business, but Seagate could also lose a key partner as its HDD production becomes increasingly important. Seagate and WD are experiencing a massive surge in sales and pre-orders, as AI hyperscalers look for a "cheap" storage solution to further expand their LLM-based technology offerings.
The potential acquisition could eventually turn into an industry-threatening situation, which is why representatives from all interested parties met in Tokyo last week to discuss the matter further. Executives from Seagate, Toshiba, and TDK are even considering creating a new joint venture, the sources said. In any case, talks are still in the preliminary stages, and everything could eventually fall apart if an agreement is not reached.
Seagate and WD each account for around 45% of the modern HDD market, while Toshiba serves customers in the remaining 10%. TDK is apparently no longer interested in making HDD magnetic heads, as the company is looking for fresh funds to invest further in major business areas such as batteries, passive components, and sensors.