Western Digital buys solid state drive maker

By on March 30, 2009, 1:00 PM
After initially playing a bit of a wait and see game with solid state drives, suggesting an eventual entry in the low-end segment, Western Digital is now buying its way into the market by announcing the acquisition of SiliconSystems today. The $65 million all-cash deal sees the embedded systems specialist become Western Digital's solid-state storage business unit, and the expansion of the vendor’s business to include the network-communications, industrial, embedded-computing, medical, military and aerospace markets.

The company has plans beyond embedded products, of course. With access to SiliconSystems’ technology, which already includes SATA and IDE drives with 2.5 and 1.8-inch form factors, Western Digital says it is prepping SSDs for the netbook, client and enterprise markets. Integration into WD begins immediately, according to the official press release, so let’s hope to see some consumer oriented drives sooner rather than later.
Press Release

LAKE FOREST, Calif. - Mar. 30, 2009 - Western Digital Corp. (NYSE: WDC), a world leader in hard drive storage for computing and consumer electronics applications, today announced that it has completed a $65 million cash acquisition of SiliconSystems, Inc., Aliso Viejo, Calif., a leading supplier of solid-state drives for the embedded systems market.

Since its inception in 2002, SiliconSystems has sold millions of SiliconDrive® products to meet the high performance, high reliability and multi-year product lifecycle demands of the network-communications, industrial, embedded-computing, medical, military and aerospace markets. These markets accounted for approximately one third of worldwide solid-state drive revenues in 2008. SiliconSystems' product portfolio includes solid-state drives with SATA, EIDE, PC Card, USB and CF interfaces in 2.5-inch, 1.8-inch, CF and other form factors. SiliconSystems has developed extensive intellectual property to address the stringent embedded systems market requirements to ensure data integrity, eliminate unscheduled downtime, protect application data and software and provide for data security and protection through its patented and patent-pending PowerArmor®, SiSMART®, SolidStor® and SiSecure™ technologies.

WD's storage industry leadership, worldwide infrastructure, and technical and financial resources will enable further growth in SiliconSystems' existing markets and customer relationships. SiliconSystems' intellectual property and technical expertise will provide additional building blocks for future products to address emerging opportunities in WD's existing markets.

"We are delighted to have the SiliconSystems team join WD," said John Coyne, president and CEO of WD. "The combination will be modestly accretive to revenue and margins as a result of SiliconSystems' existing position as a trusted supplier to the well-established $400 million market for embedded solid-state drives. SiliconSystems' intellectual property and technical expertise will significantly accelerate WD's solid-state drive development programs for the netbook, client and enterprise markets, providing greater choice for our customers to satisfy all their storage requirements."

Integration into WD begins immediately, with SiliconSystems now becoming known as the WD Solid-State Storage business unit, complementing WD's existing Branded Products, Client Storage, Consumer Storage and Enterprise Storage business units.

"WD's strong balance sheet, sales reach, and operations and logistics capabilities will allow us to greatly accelerate our penetration of our existing markets, while combining our engineering expertise with WD will enable us to develop new solid-state drives to broaden our overall product portfolio and address the emerging applications for solid-state storage in WD's existing customer base," said Michael Hajeck, a founder and CEO of SiliconSystems, now senior vice president and general manager of WD's Solid-State Storage business unit. "We are extremely excited to be joining WD and enabling an even stronger future for our talented team."

A set of questions and answers related to today's announcement can be found on WD's website at http://www.wdc.com/en/company/investor/QandA.asp.

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