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Toshiba and Fujitsu Agree on HDD Business Transfer

Toshiba Corporation (TOKYO: 6502) and Fujitsu Limited (TOKYO: 6702) today announced that they have signed a memorandum of understanding (MOU) on the transfer of Fujitsu's hard disk drive (HDD) business to Toshiba. The companies plan to conclude a transfer contract that specifies details at an early date, and aim to complete the transaction in the first quarter of fiscal 2009.

1. Details of the agreement
   Under the MOU, Fujitsu will transfer to Toshiba its HDD design, development, manufacturing, sales, and all other functions currently carried out by Fujitsu and Fujitsu Group companies, with the exception of Fujitsu's HDD head and media businesses^Note1.
   

   Note1): HDD heads and media are key components used to read and write data on the drives.

   
   The following are expected to be the main assets covered by the transfer:
   • Fujitsu's HDD development, manufacturing, and sales divisions
   • HDD manufacturing subsidiaries Fujitsu Computer Products Corporation of the Philippines (FCPP) and Fujitsu (Thailand) Co., Ltd. (FTC)
   • HDD design, development, quality assurance and other departments of Yamagata Fujitsu Limited
   • HDD technology development department of Fujitsu Laboratories Ltd.
   • HDD sales and marketing offices outside Japan
   
   Fujitsu will facilitate the transfer by bringing its HDD-related businesses and functions together in a new company. Toshiba will acquire about an 80 percent stake in this company and make it a Toshiba Group subsidiary. In order to promote a smooth transfer, Fujitsu will continue to hold a stake of under 20 percent in the new company for a certain period of time, after which it will become a wholly owned subsidiary of Toshiba.
2. Purpose
   The consolidation of the two companies' HDD businesses will enable Toshiba to reinforce its already strong position as a leading vendor of small form factor HDDs (2.5-inch and smaller HDDs), widely used in notebook PCs, mobile devices, automotive and consumer electronics. It will also give Toshiba entry into the enterprise HDD market for server and data storage system applications, where Fujitsu is currently a leader. Toshiba aims to build its position in the enterprise market to meet expected growth in demand for data storage systems.
   
   Entry into the enterprise business will allow Toshiba to further enlarge its market-leading solid state drive (SSD) business by developing SSD products for servers and enterprise storage systems, fusing Toshiba's NAND flash memory technology with Fujitsu's enterprise HDD technology. This move is expected to spur expansion of the rapidly expanding SSD market. By taking advantage of the integration of Fujitsu's HDD businesses, Toshiba also aims to strengthen collaboration with HDD parts suppliers and to promote cost reductions and the development of new technologies.
   
   Going forward, Toshiba aims to build on the consolidation to raise its share in the overall HDD market to over 20 percent by 2015.
3. Impact on Financial Results
   No impact is projected for this fiscal year. Any impact in the next fiscal year will be announced, if necessary, upon finalization of the transfer.