Japan-based Hitachi on March 7 announced that it has sold subsidiary Hitachi Global Storage Technologies (HGST), a top three hard disk drive (HDD) maker globally, to Western Digital (WD) for US$4.3 billion, which includes 25 million WD shares worth about US$750 million.
Since Toshiba acquired Fujitsu's HDD operation in April 2009, the industry has consolidated into five main players - WD, Seagate, HGST, Toshiba and Samsung Electronics. The top two companies, WD and Seagate, were separated by less than one percentage point in market share. With the latest HGST acquisition, WD is looking to widen its lead over the rest of the field.
Hitachi's quick decision and sudden change of heart stunned the market. In November 2010 when the company released results for the fiscal second quarter, it pointed out that HGST had improved financially and was scheduled to be listed on NASDAQ. In just a few months, Hitachi has changed plans, which could be an indication that the HDD industry is indeed seeing stronger-than-expected threats from SSD and cloud computing technologies.