Seagate Ready to Acquire NAND Source

 
 
By Chris Preimesberger  |  Posted 2008-06-23 Email Print this article Print
 
 
 
 
 
 
 

The world's top disk drive maker wants to go deep into the potentially huge flash market for servers and storage arrays.

Industry insiders are talking about what move Seagate Technology, the world's largest and most successful disk drive maker, is going to make to get into a better position in the NAND flash market.

Analyst Daniel Amir of financial advisory/asset management firm Lazard put out a mergers-and-acquisition research note June 19 speculating that Seagate Technology may buy out Intel's 49 percent interest-worth anywhere from $1 billion to $2 billion --  in its IM Flash Technologies flash memory joint venture with Micron Technology.

Other flash industry watchers, skeptical of that opinion, believe that Seagate may looking instead at flash chip makers Hynix and SanDisk as possible acquisition or partnership targets.

Seagate, Intel and Micron -- like virtually all companies -- do not comment on acquisition speculation.

In any case, server and storage arrays makers EMC, Dell, Sun Microsystems, Xiotech and others are either producing such solid-state hardware options now or will be bringing them to market in the next few months. So it's incumbent upon drive makers such as Seagate, Western Digital and Samsung to have the new SSDs ready when they will be needed, and that may be sooner rather than later.

"Because [Seagate] is the largest provider of enterprise storage solutions, it makes sense for them to migrate part of their business to include SSDs," Avi Cohen, director of research at Avian Securities, told me June 20.

"The biggest issue in producing SSDs -- in order to do this in a profitable manner over time -- is that you need to have a captive source of raw NAND, either to make your own or team up with somebody to make their own.

"They've [Seagate] openly said they're looking to team up with someone to secure that supply."

NOR-based flash, which first came to the market from Toshiba in 1988, has long erase and write times but provides full address and data buses, allowing random access to any memory location. 

NAND flash memory, which has much faster read-write performance, also originated with Toshiba and forms the core of the removable USB storage devices known as USB flash drives, as well as most memory card formats now available. Apple's iPod and iPhone are two of the most currently successful commercial usages of NAND flash.

The IM Flash project has made news lately. This month, the IM Flash project started shipping a 34-nanometer, 32-gigabit NAND flash memory chip, the world's smallest and densest yet. Four months ago, the project announced a new high-speed NAND flash memory chip based on 8GB memory that they said has data speeds of up to five times faster than conventional NAND.

Amir's opinion may be based on Intel's history of divesting itself of projects or companies that don't measure up within its own strategy timelines. At the moment, there is an over-supply in both flash markets -- despite the increasing sales of handheld devices -- and prices have been plummeting.

"Intel has been unhappy in that misfortunes of the NAND business have affected their overall numbers, even though it's a small part of their business," Cohen said. "Historically, they have sold or spun out or exited underperforming businesses, and they'll do it again in the future."

Why does Intel really need to be in this business anyway? Cohen asked rhetorically. "It doesn't affect their main [chip] business. It's never a great business anyway because it's so cyclical," Cohen said.

Earlier this year, Intel spun out its NOR flash unit as a new company called Numonyx, after the NOR market cooled off.

"However, I am skeptical of an Intel-Micron breakup," Cohen told me. "First of all, Micron would have to agree, which would mean the loss of a major partner -- Intel.

"Second, Micron has a cross-licensing agreement with SanDisk, which allows them to not have to pay royalty to SanDisk for MLC [multi-level cell] production.  This makes it that much easier to become competitive. That becomes a lot less certain if Intel pulls out."

"I think the best thing for Seagate is to buy SanDisk and call it a day," Cohen said. "Seagate has more expertise on the enterprise side, while SanDisk has more exposure on the retail side. SanDisk is the lowest-cost producer of NAND.

"But this is speculation.  If I were running the place, that's what I would do.  The thought is that Seagate needs to do something."


 
 
 
 
Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz
 
 
 
 
 
 
 

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