Western Digital To Acquire SanDisk

Western Digital announced today that they have entered in to an agreement to acquire SanDisk for approximately $19 billion. Western Digital is one of the few remaining hard drive manufacturers, but their only presence in the solid state storage market has been the enterprise SSDs sold by subsidiary HGST. SanDisk's joint venture with Toshiba on the other hand – one of the four major manufacturers of NAND flash – allows SanDisk to develop a wide range of solid state storage products. This acquisition will give Western Digital some much-needed diversification and potential for growth as hard drives are becoming a niche storage medium.

Without a major SSD-related acquisition, Western Digital would have faced diminishing relevance or the daunting task of carving out a significant piece of the highly competitive SSD market. Over the past several years the solid state storage industry has seen a lot of consolidation, leaving Western Digital with few options for acquisition, of which SanDisk was the largest they could afford.

However even with the acquisition Western Digital won't enjoy the same status in the SSD market that they have had in hard drives. Toshiba and SanDisk are lagging behind in the transition to 3D NAND, having only just started installing manufacturing equipment in their new fab that is intended to start production in the first quarter of 2016, a year and a half after Samsung's 3D NAND drives hit the shelves. SanDisk has also not established a large presence in the mainstream SSD controller space, relying on third-party controllers while their competitors have been striving for more vertical integration. SanDisk's 15nm NAND will probably go down in history as the most advanced planar NAND process but they're running out of time for it to make a significant impact on the market.

Western Digital expects the deal to be closed in the third quarter of 2016. The acquisition will give their future more security, but they'll still have to work hard to stay a major player in the long run.