Toshiba, Fujitsu in talks to combine HDD business

Toshiba, Japan's biggest chipmaker, would reportedly have a majority stake in any joint venture. Fujitsu is in discussions with several companies about its hard-disk drive business, spokesman Etsuro Yamada said.

The partnership may help the Tokyo-based companies improve margins and gain ground on the biggest makers of HDDs for PCs. Combined, the operations would have revenue of almost 700 billion yen (or roughly $7.8 billion), more than the HDD business of Samsung, the world's fourth-largest manufacturer.

One analyst said the deal could be a positive for both companies because it allows Fujitsu to rid of its money-losing unit and it allows Toshiba to expand a potentially profitable business.

An agreement may be reached by the end of this month, according to the report.

Fujitsu is losing money at most divisions excluding its main software business, and the possible consolidation of its HDD unit with Toshiba's would be another move to reduce expenses and bolster profitability.

To compare, Seagate, the world's largest producer of hard-disk drives, bought magnetic-head manufacturer Maxtor in 2007, while its closest rival Western Digital paid $1 billion for component maker Komag last year.

Hitachi, the world's third-largest maker of the drives, returned its business to profit in the quarter ending in March 2008 after slashing 11 percent of workforce in the unit and closing plants. Nikkei English News also reported today that Toshiba is in the final stages of discussions to buy Fujitsu's hard-disk drive business for as much as 40 billion yen.