Seagate Buys Samsung's Hard Disk Business As Sales Shrink

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Apr 22, 2011 8:00 AM, By Michael Grotticelli

Due to the flourishing recognition of spark mental recall products similar to the Apple's iPad, Samsung Electronics has sole its hard disk business to Seagate Technology for $1.38 billion in money and stock.

The treat reflects timorous sales of hard drives and accelerates the stability converging that has been occurring in the attention over the past couple of months. Seagate offering 45.2 million shares valued at $687.5 million and the residue in cash, the companies mentioned in a joint statement. They moreover concluded to supply any other with electronic storage gadgets as segment of a vital partnership.

The treat will help the industry's second-largest storage drive writer slight the lead Western Digital took final month when it concluded to purchase Hitachi's storage business, whilst giving Samsung supports to deposit in more essential businesses similar to illness care.

In the past two years hard disk makers have had to cut prices to vie against faster and not as big flash-memory chips used in electronic tablets, chic phones and a few laptop computers.

"This can't be bad for Samsung," Han Seung Hoon, an researcher at Korea Investment Securities in Seoul, told "Bloomberg News." "Samsung's hard disk business hasn't unequivocally been creation money, so with this deal, they may be more competitive."

After the transaction, that contingency be granted by U.S. and general regulators, Samsung will turn the second-largest shareholder of Seagate with a 9.6 percent interest and will be entitled to commission a director, the companies said. They design to total the treat by the finish of the year.

Samsung moreover concluded to supply Seagate with NAND spark mental recall to be used in storage gadgets done by Seagate. Seagate will supply disk drives to Samsung for personal computers and notebooks.

Hard disk drive shipments are likely to tumble by about 4 percent this quarter, among contest from not as big and faster storage products, according to IHS iSuppli. Samsung and Toshiba are the greatest makers of spark mental recall used to store information in a few laptops and tablets such as the iPad and Samsung's Milky Way tablet.

The treat shows that Seagate is at last receiving the solid-state drive (SSD) marketplace seriously. For the past 4 years, SSDs have been chipping divided at the fringes of Seagate's craving HDD marketplace - a segment that Seagate dominates with a 61 percent section conveyance marketplace share.

With a plain supply consent with Samsung, Seagate has ensured that the firm will be in a heading location any time that there's a lack of NAND spark memory. Without such an agreement, Seagate's now tiny SSD marketplace share and its following tiny level of NAND purchases would be likely to drive NAND suppliers divided as they struggled to supply the needs of more poignant NAND consumers.

Thus, Seagate may be presumption the arrange of supply consent on spark mental recall for craving and P.C. applications that Apple has gifted for its consumer applications.