Western Digital Acquires STECby Kristian Vättö on June 24, 2013 10:05 AM EST
Western Digital just announced that they've entered into an agreement to acquire STEC for approximately $340 million in cash. Technically STEC will be acquired by HGST (Hitachi Global Storage Technologies), which was acquired by Western Digital a little over a year ago. STEC's main focus is enterprise SSDs so it makes sense to merge STEC with HGST as HGST already has ULTRASTAR enterprise SSD lineup, whereas there are currently no SSDs under the Western Digital brand.
This is a good move from both. STEC has been having financial issues for a long time and one of their biggest shareholders, Balch Hill Capital, has publicly said that the company should look for a buyer. STEC was one of the earlier players in the enterprise SSD market but over the past few years their revenue has constantly been declining, partly because the competition has gotten much tougher as companies such as Intel, Samsung and Toshiba have entered the market. Nowadays even getting a steady NAND supply can be hard if you don't own a fab and the NAND market is only going to get worse next year because manufacturers are currently seeking for higher profits instead of increasing volume. While Western Digital doesn't own a NAND fab, it definitely helps when you're backed up by a multi-billion dollar company with tons of purchasing power.
For Western Digital the biggest motives behind this acquisition are the engineering talent and intellectual property: STEC has over 100 SSD-related patents and over 900 employees. HGST does have a joint-operation for SSD controllers with Intel and that operation will continue, but the acquisition certainly makes HGST more independent when it comes to SSDs and will allow them to strengthen their position in the market.
It will obviously take time before we'll see the fruits of this acquisition, but it's good to see Western Digital being more aggressive in the SSD front. Initially this acquisition will only impact the enterprise SSDs but it's possible that we'll see STEC's technology in Western Digital (or HGST) branded consumer SSDs too.
Source: WD Press Release