In a statement released on Tuesday, Fujitsu did not reveal how much the deal is worth but said the transaction should be completed in the first quarter of its fiscal 2009, ending on 30 June this year.
Under the agreement, Fujitsu will transfer all its hard-disk drive (HDD)-related businesses and functions to the new company, including HDD design, development, manufacturing and sales. It will retain a 20 percent share for "a certain period of time", before the new HDD business unit becomes a wholly owned subsidiary under Toshiba, according to the statement.
The deal will enable Toshiba to "reinforce" its position as a vendor of small form-factor HDDs, commonly used in consumer electronics and mobile devices, the company said.
The agreement will also pave the way for Toshiba to enter the HDD market for enterprise servers and data-storage system applications, enabling the company to expand its footprint in the solid-state drive (SSD) segment.
Toshiba is hoping the deal will boost its share of the overall HDD market to over 20 percent by 2015.
Discussions between the two companies were made known last month when Fujitsu said it will halt production of read/write heads for HDDs, and Toshiba confirmed it was involved in negations regarding Fujitsu's HDD business.
In a separate statement on Tuesday, Fujitsu said it is projecting a heavier net loss than previously forecast for the year, ending on 31 March, of ¥50 billion ($542 million). It earlier estimated a net loss of ¥20bn. As a result of the HDD business reorganisation and transfers, including its HDD media business to Showa Denko KK, Fujitsu expects to incur related losses totalling some ¥35bn for the full fiscal year.
The following businesses will be transferred to Toshiba:
- Fujitsu's HDD development, manufacturing and sales divisions
- Fujitsu Computer Products Corporation of the Philippines and Fujitsu Thailand, which are both HDD manufacturing subsidiaries
- HDD design, development, quality assurance and other departments under Yamagata Fujitsu
- Fujitsu Laboratories's HDD technology development department
- HDD sales and marketing offices outside Japan
This article was originally published on ZDNet Asia.