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Seagate to buy Samsung's disk drive biz?

And then there were three

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Seagate may buy Samsung's hard disk drive business, according to the Wall Street Journal.

Samsung wants as much as $1.5bn for the loss-making unit but may take less than $1bn. We understand Seagate chairman and CEO Stephen Luczo is spending up to three months in the Far East, convenient for talking to Korea-based Samsung.

With Western Digital buying Hitachi GST, Hitachi's hard disk drive (HDD) business, and thereby gaining an an approximate 50 per cent market share by revenue, Seagate lost its leadership position, having a roughly 30 per cent share. A purchase of Samsung would send this towards 40 per cent.

The hard disk drive industry would then be divided between Western Digital, Seagate and Toshiba, which has an approximate ten per cent share.

Samsung manufactures 3.5-inch EcoGreen and Spinpoint drives with capacities up to 2TB. It does not yet have a 3TB offering. It is also present in the 2.5-inch sector with Spinpoint and S3 Portable up to 640GB capacity. Were Seagate to buy the Samsung HDD business it is likely these brands would be transitioned to the equivalent Seagate brands.

The HDD business is a volume manufacturing game and Samsung's volume is too low for it to make serious money from spinning platters. Seagate indicated in a recent preliminary earnings statement it might be considering initiatives of this kind.

There is only one potential purchaser other than Seagate and that is Toshiba, which has no 3.5-inch drives in its portfolio.

Could Toshiba be considering an exit from the HDD business as well? That's a fascinating possibility and would, if Seagate bought the operation, produce two nearly equally-matched manufacturers, Seagate and Western Digital, both with around half of the HDD market. ®

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