Toshiba and Fujitsu have signed a provisional agreement under which Toshiba will acquire Fujitsu's loss-making hard-disk drive business.
A value for the deal, which is expected to close during the April to June quarter, was not disclosed.
As a first step towards the acquisition Fujitsu plans to bring its hard-disk drive operations together in a single company in which Toshiba will acquire an 80% stake. Fujitsu will hold the remaining 20% stake for an unspecified length of time after which it will become a wholly-owned unit of Toshiba, the two said in a statement.
Toshiba already has a hard-disk drive business although it's not focused in the same area as Fujitsu. Toshiba's drives are targeted at laptop PCs, mobile devices, consumer electronics and automotive applications while Fujitsu aims its products primarily at the enterprise space. It has a roughly 25% share of that market, according to IDC.
Through the acquisition Toshiba said it intends to enter the market for server and data storage system applications.
The deal will also mean Toshiba will build-up its solid-state disk (SSD) business.
SSDs are hard-disk drive-like devices that store data on flash memory, of which Toshiba is a leading producer, instead of a revolving magnetic disc. The drives have several advantages over HDDs although are more expensive, which has led to limited use.
Around 10.1 million SSDs were shipped last year, according to an estimate from IDC, and the market is set for big growth over the next few years as performance improves and they get cheaper. In 2012 IDC expects SSD shipments to hit 89.3 million units.
The deal covers Fujitsu's HDD design, development, manufacturing, sales and other related functions carried out by the company except its hard-disk head production and media business. Fujitsu will sell its hard-drive media business to Japan's Showa Denko and plans to closedown its head production operations.
Fujitsu's hard drive operations have been on the block for several months and at one point local media reports said Western Digital was close to acquiring the business.