Western Digital Stock Falls as Toshiba Targets 30% HDD Share With $380M AI Capacity Push

Western Digital Corp. (NASDAQ: WDC) stock fell about 13% to $402.11 in pre-market trading Friday, with a Nikkei report detailing Toshiba’s planned expansion of HDD capacity for AI data centers.

Western Digital closed Thursday’s regular session at $462.56, up 1.78%. Meanwhile, Western Digital Tokenized bStocks (WDCB) was trading at $402.18, down 9.85% over the past 24 hours, according to CoinMarketCap.

Toshiba’s medium-term objective is to raise its HDD market share by storage capacity to 30% from just over 10%, Nikkei reported. The publication also said Toshiba plans to invest about 60 billion yen, or roughly $380 million, in its Philippine HDD operations. Nikkei said Toshiba’s last major investment in HDD production was about five years ago.

Later Friday, Toshiba said its Philippine unit had recently begun manufacturing nearline HDDs on an expanded Laguna Technopark production line and made its first shipment from the line. The company said it aims to nearly double annual production capacity by FY2027 compared with FY2025 on a storage-capacity basis.

Toshiba’s Expansion Includes Higher-Capacity Drives

The expansion extends beyond manufacturing volume. Toshiba aims to begin mass production of 65-terabyte-class HDDs in 2030, with 100-terabyte-class drives planned later. The Philippine expansion will also support products with up to 40% more storage capacity per drive.

That capacity roadmap follows Toshiba’s recent push into larger nearline drives for hyperscale and cloud customers. In March, the company began sampling its M12 Series nearline HDDs with capacities of 30 TB to 34 TB. It also planned to sample conventional magnetic recording models of up to 28 TB during the third quarter of 2026. Toshiba cited expanding cloud services and data-intensive AI workloads among the drivers of storage growth.

For Western Digital, the competitive relevance is direct. The company identifies Toshiba and Seagate as its HDD competitors. It also identifies cloud as its largest and fastest-growing end market, supplying high-capacity enterprise drives to cloud and data-center customers.

Western Digital generated $11.49 billion of its $12.92 billion fiscal 2026 revenue from its Cloud business, equal to about 89% of total revenue.

Western Digital’s Cloud Exposure and Customer Concentration

That cloud exposure is concentrated among a relatively small customer base. Western Digital’s top 10 customers accounted for 73% of revenue, while three customers individually represented at least 10%.

At the same time, much of Western Digital’s nearer-term business is covered by existing long-term agreements. CFO Kris Sennesael said on Sept. 9 that the vast majority of calendar/fiscal 2027 was under LTAs, with some of 2028 and a smaller portion of 2029 also covered. He said the agreements commit base volumes while preserving some upside volume and pricing flexibility.

Toshiba’s expansion comes against a backdrop of strong cloud-storage demand for Western Digital. Fiscal fourth-quarter revenue rose 44% year over year to $3.75 billion, while GAAP gross margin expanded to 54.1% from 41.0% a year earlier.

For the first fiscal quarter of 2027, Western Digital guided revenue of $4.1 billion, plus or minus $100 million, and a non-GAAP gross margin of 55% to 56%.