Seagate has come under substantial pressure when Western Digital announced that it would buy Hitachi's HDD unit for $4.3 billion, making it the leading HDD maker worldwide.
Samsung isn't quite as large as Hitachi and it won't give Seagate the market lead at this time, but it’s a closer game and it would give Seagate more volume to compete. Samsung has about 18% of the HDD market, according to iSuppli.
The rumored purchase price of Samsung's HDD unit is about $1.5 billion, while Samsung would also consider deals for less than $1 billion, sources told the Journal. However, Seagate may think twice about such an acquisition since the $1.9 billion purchase of Maxtor back in 2005 did not go too well and the company needed several years to integrate the business and recover from the impact. We don't think this is a done deal yet.
While HDDs are still see as dominant mass storage products in applications where cheap storage is attractive (servers, PCs, notebooks) it makes sense that Samsung condenses its product portfolio and considers a sale of its money-losing HDD unit. The opportunity in Flash memory, where Samsung has the dominant lead, may be more attractive in the long run for the company, especially if tablets will be as successful as analysts predict.
Seagate and Samsung declined to comment on the WSJ report.