Gone are the days of yore when a 4 GB flash drive was something you could brag to your colleagues with about how many “songs and episodes” you simultaneously carry around. Today, technological advancements and the rising competition between electronic component makers have forced the cost of flash storage to an all-time low, and turn consumer attention into the direction of smartphones, mobile devices, and cloud datacenters. This has led to Western Digital Corp., the biggest maker of computer disk drives, to acquire SanDisk Corp., a supplier of flash memory devices in a deal reportedly worth $19 billion.
The deal stands to reshuffle Western Digital Corp.’s position in the memory storage market, transforming a specialist into the broadest supplier of data-storage components. As WSJ points out, the steep $19 acquisition price is but another example of the all-time high cost of business surrounding the semiconductor industry. The combined value of such deals has already reached $100.6 billion by the beginning of the 2015 fourth business quarter, exceeding the $37.7 billion totaled for all of 2014.
Western Digital remains one of the top makers of hard disk drives worldwide, with storage solutions reaching capacities of up to 6TB, a gigantic increase from just a few years ago. This level of storage is excellent for backing up immobile data, but no longer the sole solution in today’s increasingly cloud-based world.
Instead, chip-based flash storage products such as those made by SanDisk, Kingston, and Crucial have begun cornering the mobile market now that they offer significant storage capacity at a fraction of the weight of traditional hard drives. Coupled with the proliferation of laptops, tablets, and smartphones, and it’s easy to see why the acquisition gives Western Digital an additional avenue for staying competitive.
“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,” said Steve Milligan, chief executive officer, Western Digital. “The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I'm excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees.”
The joint R&D and engineering proficiencies of the two companies, along with their combined 15,000 patents (issued or pending) is expected to create new pricing pressure in the storage market.
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