Seagate CEO Rejects New Factories, Shares Plunge 7.5% on Capacity Strategy
Seagate shares dropped 7.5% after CEO Dave Mosley said building new factories would take too long and risk overcapacity, opting instead for a build-to-order model with four to five quarters of visibility. The company aims for mid-20% CAGR by increasing platter densities from 3TB to 5TB and expects 50% exabyte crossover to Mozaic 3 HAMR in H2 2026.
1. CEO Rejects Factory Expansion
During a technology conference presentation, CEO Dave Mosley stated that building new manufacturing facilities would take too long and could leave Seagate with excess capacity, triggering a 7.5% share price decline. He emphasized optimizing existing sites rather than committing to long lead‐time projects.
2. Build-to-Order Model
Seagate has shifted to a build-to-order approach, offering customers visibility four to five quarters ahead. Critical components like recording head wafers have lead times exceeding nine months, with final drive assembly adding another quarter.
3. Focus on Technology Transitions
Rather than expanding physical capacity, Seagate plans to drive exabyte growth by moving from 3TB to 4TB and 5TB per platter products. Management forecasts a mid-20% compound annual growth rate through these density improvements.
4. Mozaic 3 HAMR Adoption Timeline
Seagate has qualified its Mozaic 3 HAMR technology at all targeted cloud service providers and expects HAMR drives to account for 50% of its shipped exabytes in the second half of 2026, supporting long-term capacity needs.