Sunday, October 25, 2015

Western Digital Buys SanDisk For $19 Billion

Storage drive maker Western Digital Corp. has acquired non-volatile memory and solid-state drive maker SanDisk Corporation for roughly $19 billion in cash and stock. 

The deal will pave the way for Western Digital to enter the fast-growing SSD market. Western Digital said the deal will further the company’s mission to become the global leaders in storage solutions technology, and will effectively double its addressable market by providing access to high-growth SSD markets. The deal is expected to be complete in the third quarter of 2016. 

Steve Milligan, CEO Western Digital, said in a statement: "This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology”, and also added this:  "The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry."

Founded in 1988 and headquartered in Silicon Valley, Flash specialist SanDisk is one of the largest makers of NAND flash memory chips. The company has manufactures storage products used in data centers and embedded in smartphones, tablets and PCs. SanDisk has more than 8600 employees worldwide, it holds more than 5000 patents worldwide. SanDisk’s patent portfolio is consistently recognized as one of the strongest in the technology world. SanDisk is currently the number 2 player in SSD space trailing only market leader Samsung Electronics.

According to market research firm IDC, western Digital has a leading 44 percent of the market for hard disk drive in 2014. However the company suffered a sales decline of 4 percent in its most recent financial year reports and the overall storage business also shrank to $32.9 billion. Under the terms of deal, Steve Mulligan will serve as CEO of the combined company, with SanDisk President and CEO Sanjay Mehrota expected to join the Western Digital board of directors. Western Digital will remain headquartered in Irvine, California. 

It’s a smart move for Western Digital, the SSD market is projected to be worth about $15.5 billion in 2015, growing to $20.5 billion in 2019, according to the latest data compiled by market research firm IHS Inc. Another research firm International Data Corporation makes a forecast that the SSD unit shipments will increase at a compound annual growth rate (CAGR) of nearly 18 percent from 2014 to 2019, growing from 88.9 million units to 200.5 million units. In addition, IDC also forecasts that the total SSD capacity shipped is expected to grow at a CAGR of 42.9 percent over the same five-year period. 

Image credit: Supply Chain Digital

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