Seagate, Toshiba reportedly compete for TDK's HDD head unit, a key AI storage link

Seagate (STX) shares fell 9.5% due to concerns over a multibillion-dollar acquisition contest with Toshiba, potential balance sheet strain, and high valuation. Toshiba's planned 2027 capacity ramp and insider selling also contributed. STX is up 180% YTD but 26.4% below its 52-week high.

Seagate (STX) and Western Digital (WDC) shares fell on Tuesday due to concerns over supply-chain disruption and uncertainty around TDK's magnetic-heads unit. Both companies are major HDD suppliers benefiting from AI data-center demand. Seagate dropped 8.9% to $808.08, while Western Digital fell 6.4% to $413.16. The potential TDK deal could reshape the HDD supply chain and impact pricing power.

Seagate (STX) and Western Digital (WDC) are competing in the AI-driven hard drive market. Toshiba plans to invest $380M to double HDD production, aiming for 30% market share. Both STX and WDC stocks fell 10% initially but rebounded as analysts noted continued undersupply. Seagate and WDC are developing high-capacity drives, with Seagate using HAMR technology. Toshiba and Seagate may acquire TDK’s magnetic-head business, crucial for the industry.

Western Digital (WDC) and Seagate (STX) stocks fell 7% and 8% respectively after a Bloomberg report indicated both are competing to acquire TDK’s magnetic-head operation. Investors fear increased competition and potential supply changes in the HDD market. Analysts maintain a Strong Buy consensus for both, with significant upside targets. TDK’s ownership could impact all three companies' supply chains.

Toshiba and Seagate (STX) are reportedly pursuing TDK's magnetic head business, with Seagate submitting a higher offer. Goldman Sachs maintains a Buy rating on TDK. TDK denies initiating the reports but acknowledges discussions. Any deal would require antitrust review and could impact TDK's focus on batteries and sensors.

Seagate Technology (STX) is in talks to acquire TDK's magnetic heads division, competing with Toshiba. The deal could be worth billions. TDK's shares rose in Japan, while Seagate's stock fell 1.3% premarket. Seagate's GF Value™ suggests it is overvalued, trading at $887.09 vs. an estimated $195.37. The company has a GF Score™ of 77/100, with strengths in growth and profitability but weak valuation. Insiders sold $589.3 million in shares over the past year.