Seagate, Samsung combine hard-drive units in $1.4B deal

Wow. Looks like the Wall Street Journal was more or less right on the money yesterday. Seagate and Samsung have announced a “broad strategic alignment,” as part of which Seagate will take over Samsung’s hard-drive operations in exchange for a cool $1.375 billion (paid half in cash, half in Seagate stock).

There’s quite a bit more to this deal than just Samsung’s HDD business changing hands, though. Here’s a list of the “major elements of the agreement,” in the two companies’ words:

  • Samsung combining its hard disk drive (HDD) operations into Seagate
  • Extending and enhancing the existing patent cross-license agreement between the companies
  • A NAND flash memory supply agreement under which Samsung will provide Seagate with its market-leading semiconductor products for use in Seagate’s enterprise solid state drives (SSDs), solid state hybrid drives and other products
  • A disk drive supply agreement under which Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics
  • Expanded cooperation between the companies to co-develop enterprise storage solutions
  • Samsung receiving significant equity ownership in Seagate
  • A shareholder agreement under which an executive of Samsung will be nominated to join Seagate’s Board of Directors

That NAND supply agreement is particularly interesting, because yes, in case you forgot, Seagate does offer a line of solid-state drives—and Samsung just happens to be the world’s biggest supplier of NAND flash memory. Also, that half-cash, half-stock payment means Samsung will end up with 9.6% ownership of Seagate. I imagine the word “synergy” was used extensively during the negotiations, and quite rightly so.

In any case, the deal is expected to close by the end of the calendar year. That will leave the hard drive market with just three major players: Western Digital, Seagate, and Toshiba. (WD agreed to buy out Hitachi Global Storage Technologies earlier this year, and Toshiba took on Fujitsu’s hard-drive back in 2009.)

Comments closed
    • Chrispy_
    • 9 years ago

    \o/
    New Momentus XT please, Seasung.

    WD’s velociraptor can DIAF. I’ll take generally higher-performance, lower power-consumption and lower cost-per-GB any day of the week, thanks.

    Plus, as hybrid controllers get better (and maybe permit read *and* write to NAND), hybrids will distance themselves from traditional drives.

    Mechanical disk tech has been squeezed hard for the last decade, and all that progress in areal density has come at the expense of seek times. People want performance, and that’s the domain of flash storage.

    • HisDivineOrder
    • 9 years ago

    I expect Toshiba to give up soon, too.

    • Krogoth
    • 9 years ago

    Not surprising at all.

    HDDs have become commodity goods with growing R&D costs.

    Flash (SSD) is where all the money is being made.

    • JMccovery
    • 9 years ago

    I’m beginning to think that Samsung was the one that made out like a bandit:
    1. Free of their HDD unit
    2. Possibility of being the sole NAND supplier to Seagate
    3. Gain of equity ownership in Seagate
    4. A deal where one of Samsung’s execs gets nominated (and more than likely appointed) to Seagate’s BoD

    it seems like the people brokering the deal between Samsung/Seagate were the same people that brokered the deal between At&t/T-Mobile. (Corps win, Customers lose… FTW!!!)

    Maybe, just maybe, this will make Seagate actually IMPROVE the consumer Barracuda line.

    • ssidbroadcast
    • 9 years ago

    Sure, $1.4 billion sounds like a lot of money at first, but after formatting it’s only $990 million.

      • Pagey
      • 9 years ago

      Now that’s funny, I don’t care who you are.

      • flip-mode
      • 9 years ago

      good one.

      • Palek
      • 9 years ago

      Well done!

      • a-dizzle
      • 9 years ago

      As a long-time lurker, I finally signed up purely to congratulate you on this finely crafted piece of comedic genius.

      That is all.

        • ssidbroadcast
        • 9 years ago

        Just doin’ my job. 🙂 Welcome to the best site on the internet.

      • Wirko
      • 9 years ago

      Or [url=http://en.wikipedia.org/wiki/Mebi-#IEC_standard_prefixes<]Mi[/url<]$944, which sounds even more modest.

    • potatochobit
    • 9 years ago

    when wall street was right yesterday, it’s called insider trading

    I thought apple might have been interested in samsungs hard drive business
    but I guess they just plan to buy parts from whomever is cheapest

    • Kurotetsu
    • 9 years ago

    Better start stocking up on Spinpoints before their scarcity value skyrockets.

    • jensend
    • 9 years ago

    🙁

      • ClickClick5
      • 9 years ago

      Exactly. Seagate will kill of this line of better drives too.

    • ronch
    • 9 years ago

    Just a thought. Seagate is the GM of hard drives.

    Before, there was Seagate, Conner, Maxtor, Quantum, Fujitsu, IBM, WD, Samsung, Micropolis.

    Seagate bought Conner. Maxtor bought Quantum. Then Seagate bought Maxtor, and now Samsung.

    So Seagate is now comprised of 5 companies: the original Seagate, Conner, Maxtor, Quantum and Samsung.

    And WD is the Toyota of hard drives, having only acquired one competitor, Hitachi, but being able to expand to be No. 2 without so much consolidation.

      • burntham77
      • 9 years ago

      Back in college, when money was tighter than it is now, Maxtor was my go-to brand for drives. They were a great value and I never had one die on me.

        • srg86
        • 9 years ago

        Yeah it’s amazing how things change, and I never had a Maxtor Drive die on me either, my path has been (since moving to the PC from my Amiga and its Conner drive):

        Quantum -> Maxtor -> Western Digital.

          • nanoflower
          • 9 years ago

          And the only drives I have had die on me where Samsung drives. I had one of the Deathstars that kept working years after all of the problems were being reported and ended up being replaced after years for a larger drive.It just goes to show that you can never tell which drives will work best for you.

          Even with the issues I had with Samsung drives I do believe they are among the best in the market today. Too many consistently give them high praise for their reliability while reviewers give them high praise for their performance. It’s too bad that Seagate has purchased the HD unit. While they will still be producing drives it’s going to be impossible to be sure you get a drive from that division and who knows if the quality will remain high.

        • thanatos355
        • 9 years ago

        Oh how I miss being able to put Maxtor drives in my machines. They were the only thing I used because of how reliable they were for me. I still have some in their boxes and use them when drives die in friends computers from time to time. Damn you, Seagate, for killing Maxtor! Since then I’ve been using WD and Samsung for myself and friends to great effect. Looks like it’ll just be a WD world for me from now on. Damn you, Seagate!

      • ronch
      • 9 years ago

      Well folks, it’s sad that every part of the PC is being consolidated now. CPUs, Intel and AMD. Graphics, AMD and Nvidia (ok, count Intel in). HDDs, Seagate, WD and Toshiba (just a matter of time before they sell their HDD division too). Motherboards, just a handful including Asus, MSI, Gigabyte, Foxconn, Intel and ECS (before, we had something like 20+ mobo makers). Sound, well, we had lots of add-on board makers but Intel’s HD Audio spec almost gave all the market to Realtek and some other little league codec providers). Heck, even PC OEMs are fewer now. Who remembers Micron, Zeos ALR, CompuAdd, Compudyne, Quantex, Blackship, HiQ, AST, etc.?

        • indeego
        • 9 years ago

        Alternatively, we also have some of the most reliable equipment ever? I mean, in 1995-2003, I replaced hundreds of desktops drives from the various companies/schools/homes I worked for. In 2004-2011 I think I’ve seen 3-4 die for desktops and laptops each? And even then the drives were workable and you could still access data from them…

        I haven’t seen bad caps in a while. I replaced my first power supply gone bad in 2010, the one previous to that was in 2003.

        The $300 CPUs we have are more powerful than most supercomputers a decade ago. The $20K server I bought in 2007 is now easily outpaced by a $2000 box, and runs cooler, far faster, etc. (I could easily build it for half that with little compromise.)

        Consolidation is inevitable. What we need are a reboot of the patent/trademark/copyright sector to really let the small/innovative thinkers have their day. Right now it’s far too protective of the biggest cash-hoarders.

    • ronch
    • 9 years ago

    I can see Samsung getting the better end of the deal here. For Samsung:

    1. Samsung gets to sell Seagate SSD NAND chips.

    2. Even if Seagate supplies HDDs for Samsung PCs, Samsung PCs and devices which use HDDs are so relatively scarce anyway.

    3. Samsung gets Seagate shares and even gets to plant a member in Seagate’s board.

    4. Samsung gets a cool $1.375 worth of cash/Seagate stock.

    5. Samsung gets rid of an old elephant to concentrate more on its new technology (SSD tech).

    … and as for Seagate..

    6. Seagate gets more access to Samsung’s patents, which should be relatively more modern than Seagate’s patents, most of which probably only have to do with aging mechanical hard drive technology.

    7. Seagate expands its market share, just in time because WD just bought Hitachi.

    And lastly, HDDs are gradually dying off, as great as it currently is on a price-per-GB perspective. Seagate is buying factories that, sometime in the not-so-distant future will have to be completely retooled to produce SSDs. That may still be far off, but like I said, Samsung’s ditching an old elephant and Seagate’s snapping it up. Looks like Seagate and WD are fighting an old battle. A battle that may well become irrelevant sooner or later.

    All in all, IMHO, Samsung gets the better deal.

      • mnecaise
      • 9 years ago

      [quote<]2. Even if Seagate supplies HDDs for Samsung PCs, Samsung PCs and devices which use HDDs are so relatively scarce anyway.[/quote<] They may not be common in North America but apparently they are common on the other side of the Pacific.

    • Anomymous Gerbil
    • 9 years ago

    Doom-mongers, do you *really* think Seagate are not going to take advantage of any good Samsung tech they can now get their hands on?

      • axioms
      • 9 years ago

      This is what I am hoping for. All seagate drives in 2012 using Samsungs tech.

      • stdRaichu
      • 9 years ago

      If the Maxtor acquisition was anything to go by, seagate kept all the good tech for their enterprise kit and the considerably crappier maxtor kit went into the majority of their desktop lineup.

      Seagate are certainly going to clean up in OEM sales though; I’m not aware of anyone who uses non-Samsung SSD’s in builds (other than boutique builds and the occasional toshiba), and samsung had fairly good OEM penetration as well.

        • indeego
        • 9 years ago

        HP uses Intel SSD’s in their business line as of last year.

        And Seagate HDD’s as well.

    • jjj
    • 9 years ago

    “Samsung just happens to be the world’s biggest supplier of NAND flash memory”

    The biggest NAND supplier is the Toshiba-Sandisk JV with some 40% market share.

      • Cyril
      • 9 years ago

      Got a source for that? The latest information I can find says Samsung is the market leader.

      [url<]http://www.ebnonline.com/document.asp?doc_id=205809[/url<]

        • DancinJack
        • 9 years ago

        [url<]http://www.isuppli.com/Abstract/P13698_20110331172924.pdf[/url<]

    • gbcrush
    • 9 years ago

    Like many, I sigh over this, and not with relief.

    I used to be a Seagate fan actually. I did a couple of builds with barracudas. Then the “quiet” part of their line started getting noisier (even while corporate pitched “same acoustics as last years model, better formance” fluff), and when I gave them a try, I had two failures in six months.

    Yeah, it was about that time I discovered the Samsung spinpoints, and rediscovered WD.

    Ahh well, looks like I’m going WD in my next build. I was kind of leaning that way, anyways.

      • Spotpuff
      • 9 years ago

      Same boat. Initially seagate was nice and quiet, then their drives got really stupid loud. I went to them after the death star fiasco and ended up using nothing but western digital up until a new build last month that I used a Seagate 1tb for (on sale for $45). Drive died after installing Windows, my 7th hard drive failure (out of like, 12 disks, ugh) and 3rd DOA seagate.

      The guy at the computer store (BECAUSE HE IS AN EXPERT) said Seagate was going downhill and they were getting a lot more seagate returns than other drives. I realize this isn’t quantitative at all but yeah didn’t exactly make me want to get another Seagate drive ever again.

        • Palek
        • 9 years ago

        7 dead HDDs out of 12? That sounds horribly wrong… I assume you know what you are doing since you are posting on TR, but:

        1. Do you ground yourself before handling HDDs and other components to avoid ESD damage?
        2. Are you using a quality PSU?
        3. Is your case properly ventilated and clean? (Proper airflow over HDDs, no gigantic furballs or towers of dust inside?)
        4. Are you sure your kids are not using your computer for practising their football tackles?

        I have probably bought over 15 HDDs since I have started building computers, and only 1 (!) of them died on me. Your numbers are seriously off!

      • l33t-g4m3r
      • 9 years ago

      Don’t have any problems with my 1.5’s, they’re quiter than WD’s black too.

      Side note: Maybe now we can start seeing hybrid drives.

      • Bensam123
      • 9 years ago

      Going to disagree with this, I have plenty of Seagates that still run including a 20Gb ATA model. I do have plenty of dead Maxtor and WDs though. I have no dead Seagates at the current time.

        • srg86
        • 9 years ago

        Well for me, if a drive is going to die, it will be a Seagate. I have 15 year old Quantums, Maxtors and WDs, but nothing from Seagate ever seems to last anywhere near that.

          • thanatos355
          • 9 years ago

          Preach, Brother!

          • derFunkenstein
          • 9 years ago

          Same here. I’m all WD now, outside of an external drive. My wife’s laptop came with a Seagate drive, I actually pulled it and stuck in a (larger) WD drive.

    • djgandy
    • 9 years ago

    This sucks. As a nobody a few years ago Samsung have really delivered some good drives. I’d rather they merged with WD.

    Hopefully Seagate will wind down their drive business and use Samsung’s. My experience with Seagate drives has been noisy, hot and unreliable, and not even fast with all that…

      • Spotpuff
      • 9 years ago

      I’d rather Seagate die off and not ruin other hard drive companies the way they ruined their own.

      • grantmeaname
      • 9 years ago

      My first wife was the same way.

        • Firestarter
        • 9 years ago

        Well at least she was hot.

          • SHOES
          • 9 years ago

          Yea but her cooking sucked!

            • sweatshopking
            • 9 years ago

            mine just straight up rarely cooks. the hotness makes up for it, though.

            • tejas84
            • 9 years ago

            Your wife is one hot babe! Lucky guy!

      • Pettytheft
      • 9 years ago

      I remember when WD drives had major issues and Seagate was consistently rock solid. Everything is cyclical.

      • burntham77
      • 9 years ago

      Seagate drives are the only ones I have used that have died on me in relatively short time. I have never lost data because of it, as I do regular back ups, but maybe it’s time to go full on WD when it comes to hard drives.

    • axioms
    • 9 years ago

    So does this mean no more spinpoints? Will Seagate use any of Samsungs Tech to improve thier own line? This sucks. Really. I wonder, with the 9.6 ownership stake if samsung will have any real influence over Seagates hard drive business.

      • merkill
      • 9 years ago

      It would have been better if wd bought samsung.

      Samsung has great drives seagate not so much anymore they used to be good but that was a long time ago now , all one can hope for is that next gen samsung/seagate drives will be better that what seagate has now ,time for a new hd era to start.

      But im sticking with WD these snext 1-2years until i see what seagate does go with this.

      Just ordered 4x2tb WDgreen for my NAS/HTPC ehh private movie collection 🙂

Pin It on Pinterest

Share This