A recent statement by Seagate's CEO, Dave Mosley, about the lack of necessity for new memory manufacturing plants has sent shockwaves through the tech industry, resulting in a significant decline in stock prices not only for Seagate but also for major competitors.
During a conference hosted by JPMorgan, Mosley expressed that the construction of new facilities is not in Seagate's plans, as it could lead to substantial negative consequences. This announcement came just days after Seagate's stock price reached an all-time high of $834.01 on May 11, 2026. However, by May 18, shares fell 7.36% to $736.89, illustrating a drop of nearly $100 in just a week. Reports indicate that by May 19, the stock was trading around $740, confirming the extent of the decline.
Mosley highlighted the lengthy process involved in building new factories and the diversion of resources that such projects entail. He warned that these expansions could actually hinder technological advancement rather than address immediate market needs. He pointed out the risk of overproduction, cautioning that as the current surge in demand subsides, new capacity could become a financial burden.
This news triggered a domino effect across the sector, leading to sharp declines in the stock prices of several key players. Samsung Electronics saw its shares drop approximately 8.6%, falling from $197.40 to $180.40 by the market close on May 15. Similarly, SK Hynix experienced a reduction of about 7.7%, and SanDisk's stock fell by 5.3%. Taiwanese firm Nanya Technology also suffered a loss of around 8-10% during the same period.
In light of the growing demand for data storage, particularly driven by the surge in AI investments, Mosley outlined Seagate's strategy to meet this demand without building new factories. Instead, the focus will be on improving technology, particularly by increasing data density. Mosley indicated that the company plans to transition production from 3TB drives to 4TB and 5TB models, aiming for an annual growth rate of 24-26%. This strategy involves upgrading existing equipment and enhancing their Mozaic platform, leveraging HAMR technology to increase storage capacity more swiftly than through new builds.
The current market dynamics underscore the urgency of addressing the increasing storage needs in data centers, as existing supply chains struggle to keep pace. Concerns over Seagate's capacity to meet this explosive demand contributed to the dramatic market reaction. Mosley acknowledged that even with a clear understanding of customer needs for the next five quarters, the company is unable to fulfill all orders. He noted that large-scale factory construction would only make sense if AI technologies expand beyond data centers to Edge AI applications.
This situation reflects the volatility within the memory production sector and may prompt competitors to reevaluate their expansion strategies in light of Seagate's cautious approach.
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