Seagate’s $1.375 billion acquisition of Samsung’s hard drive business today also strengthens Seagate’s solid state drive (SSD) hand by extending the NAND flash partnership between the two vendors.
Samsung sells hard drives for PCs and consumer electronics, so the SSD part of the deal is the key piece for enterprises.
“This provides Seagate with an important source of leading-edge NAND supply and early visibility into the next-generation of NAND,” Seagate CEO Steve Luczo said on a conference call to discuss the deal.
Seagate and Samsung announced a NAND partnership last August. Seagate launched its first enterprise SSDs in March with its Pulsar .2 mult-layer cell (MLC) and Pulsar XT.2 single-level cell (SLC) SSD using Samsung NAND chips. Seagate was slow entering the SSD market, but Luczo said those Pulsar products should be coming into the market through storage system OEM partners soon and Seagate is on schedule for its next generation of SSDs in partnership with Samsung. Still, Seagate’s OEM customers wanted assurances that the Seagate-Samsung arrangement would remain intact.
“This addresses an issue that customers have raised,” he said. “While they have a lot of confidence for Samsung and Seagate to design flash products, there always has been a bit of a concern that without a formal supply agreement, what was the whole package going to look like?”
Seagate also sells hybrid systems with SSDs and hard drives.
The Samsung deal, which Seagate expects to close around the end of the year, is the second major disk drive merger in barely a month. Western Digital said in March it intends to buy disk drive rival Hitachi Global Storage Technologies (HGST) for $4.3 billion.
Luczo said the consolidation reflects the growth of storage capacity worldwide and the need for investment in new storage technologies.
“Demand for storage is accelerating,” he said. “Petabyte growth is very strong and has been for the last six to eight quarters, even in an economy that has been lackluster.”