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Western Digital Is Buying SanDisk For $19 Billion

Western Digital recently announced that it is buying up data storage vendor SanDisk for $19 billion in cash and stocks. This merger is coming at a time when the IT industry is evolving at breakneck speeds and companies are looking for new ways to get in on trends like wearable tech, the Internet of Things, and cloud computing. As a result, there has been a wave of mergers and acquisitions along with an increase of investment activity in the data storage market.

Western Digital's acquisition of SanDisk comes right after the market's biggest acquisition ever, when Dell purchased EMC for $67 billion. That deal hit news outlets last week and, in addition, storage semiconductor maker PMC-Sierra has also received a number of bids to take it over while Unisplendor, who is owned by China's Tsinghua, agreed to buy 15% of Western Digital for $3.78 billion. Western Digital focuses mainly on hard disk drives (HDD) though it is facing an evolution in IT that is pushing companies towards addressing a changing set of requirements for both client and enterprise end customers.

Enterprises no longer have to rely entirely on tape drives for backups and hard drives for primary data. However, the do have to deal with higher speed requirements that come with applications like online transaction processing and big data analytics. Solid-state drives (SSD) are a vital piece of multi-faceted storage infrastructures whereas flash memory devices simply sit under DRAM as top-tier storage. Western Digital and SanDisk are both based in California and they are both heavily involved in different segments of the consumer data storage market. Western Digital offers desktop NAS drives while SanDisk operates as a leader in flash-based thumb drives and memory expansion cards.

Earlier in the year, SanDisk, which is also known for its SSDs for desktops and laptops, announced its very first lineup of pocket-sized, high-capacity external drives. This buyout of SanDisk gives Western Digital an instant position in the global, non-volatile NAND flash memory market, according to Research Vice President of IDC Jeff Janukowicz. "Additionally, the NAND industry is at an infection point as it transitions from planar to 3D technology and access to that technology was a key piece of the deal," Janukowicz stated. "Now, WD is positioned to address a much larger footprint in the storage industry."


Western Digital noted during its announcement of the deal that the combination will "enable it to vertically integrate into NAND, securing long-term access to solid state technology at lower cost." SanDisk as 27 years of experience in the NAND flash memory industry and recently announced a deal with Toshiba to manufacture the world's densest 3D NAND, which is a 48-layer, 32GB chip that offers twice the capacity of the next densest memory. Also during the announcement Western Digital also noted the 15-year partnership between SanDisk and Toshiba and stated that it expects that relationship to be "ongoing". According to the company, "The joint venture provides stable NAND supply at scale through a time-tested business model and extends across NVM technologies such as 3D NAND."

According to Gregory Wong, an Analyst with Forward Insights, this deal between Western Digital and SanDisk will allow WD to enter the consumer SSD and enterprise SATA SSD market. "WD wants SanDisk for the access to the flash. Their PC HDD business is declining due to the weak PC market but also because SSDs are encroaching that space," Wong added. "Without access to NAND flash at cost, it would've increasingly been difficult to compete with NAND players in the enterprise space."

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