Shares of Western Digital Corp. and Seagate Technology Holdings PLC fell sharply in midday trading Tuesday, as investors grew concerned that Toshiba Corp. would ramp up production of a key AI storage product.
Western Digital shares were down 12.5% in afternoon trading, while Seagate shares were down 8.7%.
The concern stems from a report by TrendForce, a research firm, that Toshiba is preparing to boost its production of solid-state drives (SSDs) used in AI applications. These SSDs are crucial for storing and processing the massive amounts of data required by AI models.
Currently, Western Digital and Seagate enjoy strong pricing power in the AI storage market, benefiting from limited supply and high demand. However, an increase in Toshiba’s production could disrupt this balance, leading to lower prices and reduced profit margins.
“We are monitoring the situation closely,” said one analyst, who declined to be named. “Toshiba’s move could have significant implications for the entire storage industry.”
The news comes at a time when the storage market is already facing headwinds from slowing demand for PCs and smartphones. The AI storage market has been a bright spot, but even that segment could be vulnerable if supply increases too quickly.
Western Digital and Seagate did not immediately respond to requests for comment.