Seagate is fueling rumors in the NAND industry with analysts saying that they expect Seagate to acquire a NAND source to shore up its supply of NAND flash chips. The company is in preparation for its line of solid state drives (SSD) that it will have to produce within the next few years.
According some analysts, the only way to be really profitable in the SSD market is by having a secure and fixed source of NAND chips by building them yourself or by teaming up with a company that builds NAND directly.
This is the route that Intel took for its own line of SSDs — that are undergoing in-house testing — by teaming up with NAND flash maker Micron. Analyst Daniel Amir from the firm Lazard told eWeek that Seagate may be looking to buy out Intel’s 49% stake in the IM Flash Technologies joint venture Intel has with Micron.
Purchasing the 49% stake from Intel would reportedly cost Seagate anywhere from $1 billion to $2 billion. Avi Cohen from Avian Securities told eWeek, “However, I am skeptical of an Intel-Micron breakup. First of all, Micron would have to agree, which would mean the loss of a major partner — Intel.”
If buying out Intel’s share of Micron isn’t an option, a purchase of SanDisk may be the route to go according to Cohen. Cohen says that right now SanDisk is the lowest cost source for NAND flash modules, making it a much better target for Seagate to acquire or partner with.
Seagate announced in May that it would have its own line of SSDs on the market next year. However, Seagate says it will not aim its products at the retail market; rather it will aim its SSDs at the enterprise market where the benefits of SSDs along with much larger budgets make the technology more attractive.
Cohen says, “I think the best thing for Seagate is to buy SanDisk and call it a day. 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.”
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