Western Digital Splitting their HDD and Flash Divisions into two Separate Companies

[CommanderAlex]

 

Summary

Western Digital has announced plans to split the company in two by spinning off their flash division into a separate company and keep the hard drive disk (HDD) division. This is recent in news after talks between Western Digital and Japanese memory maker Kioxia to merge have scrapped plans. This is expected to occur over the second half of 2024. This was a unanimous decision by the board of directors. 

 

Quotes

Quote

“Our HDD and Flash businesses are both well positioned to capitalize on the data storage industry’s significant market dynamics,” Western Digital CEO David Goeckeler said in a statement. “Given current constraints, it has become clearer to the Board in recent weeks, that delivering a stand-alone separation is the right next step.”

 

My thoughts

This is pretty interesting to see since Western Digital bought SanDisk back in 2016 and are now separating the two divisions once again. I hope there is no change in quality or where the future lays for Western Digital in a tight market for hard drives between Seagate and Toshiba being big players here. 

 

Sources

https://www.investors.com/news/technology/wdc-stock-western-digital-jumps-on-plan-to-split-business/

https://www.theverge.com/2023/10/30/23938334/western-digital-separating-hard-drive-flash-business

 

[porina]

For some market context, from first hit on NAND market share - Q2 2023 rounded to nearest %:

Samsung: 31%

Kioxia: 20%

WDC: 15%

SK Hynix: 18%

Micron: 13%

Others: 4%

 

My memory isn't great, did WD have significant flash offerings before they bought out Sandisk? Splitting HD and flash would be kinda like returning to Sandisk, although that brand only seems to be mainly used for SD cards now.

 

What are they setting up for by this move?

[Needfuldoer]

Sure, why not! Splitting the company worked out so well for Motorola, after all.

 

15 minutes ago, porina said:

What are they setting up for by this move?

Speculation: Maybe Kioxia only wants the flash storage division, and they couldn't reach a deal to merge with WD in its current form. If they merged with all of WD and chose to divest the magnetic storage division afterward, all that capital would be tied up while they struggle to find a buyer and complete the sale.

 

They couldn't sell to Seagate, because that would effectively create a monopoly (thus drawing attention from regulators, like Nvidia-ARM). Toshiba may not be able to afford to buy it, and even if they could that would still leave the mechanical hard drive market with a duopoly.

 

If Western Digital splits on its own, "WD-HDD" will continue to exist in its current form and Kioxia can acquire "WD-SSD" free and clear.

[Kisai]

7 hours ago, Needfuldoer said:

Sure, why not! Splitting the company worked out so well for Motorola, after all.

 

Speculation: Maybe Kioxia only wants the flash storage division, and they couldn't reach a deal to merge with WD in its current form. If they merged with all of WD and chose to divest the magnetic storage division afterward, all that capital would be tied up while they struggle to find a buyer and complete the sale.

 

They couldn't sell to Seagate, because that would effectively create a monopoly (thus drawing attention from regulators, like Nvidia-ARM). Toshiba may not be able to afford to buy it, and even if they could that would still leave the mechanical hard drive market with a duopoly.

 

If Western Digital splits on its own, "WD-HDD" will continue to exist in its current form and Kioxia can acquire "WD-SSD" free and clear.

Personally, I don't think any storage manufactuers should be merging, we lost enough over time that we basically only have two choices (WD or Seagate) and flash was an emerging storage medium that is pretty much dooming spinning-rust hard drives to just bulk storage, much in the same way that tape is relegated to.

 

Once flash achieves a storage density and $/TB greater than spinning discs, you're going to see a wholesale destruction of the spinning disc and magnetic tape market. Why would you buy either of these products when you can buy flash media. Flash media has already replaced all uses of optical drives, and those were thought to be cheap.

 

So this might be about cutting the spinning disc market loose first.

 

Right now we're still looking at $33/TB for NVMe SSD's, and $4.5 per TB for 7200RPM Mechanical drives. LTO-8 is 2.5$/TB. BD-R is $17/TB

 

Once flash storage becomes cheaper than blueray discs, ODD's are going to completely disappear.

 

[porina]

11 hours ago, Kisai said:

Personally, I don't think any storage manufactuers should be merging, we lost enough over time that we basically only have two choices (WD or Seagate) and flash was an emerging storage medium that is pretty much dooming spinning-rust hard drives to just bulk storage, much in the same way that tape is relegated to.

Toshiba still exist as the third player in the spinning space. For the quarter at the start of this year unit share was approximately:

Seagate 45%

WDC 36%

Toshiba 19%

 

Flash still has many competitors. Even if the Kioxia x WDC deal had gone ahead, the combined entity would have overtaken Samsung for top spot. There would still be 4 major players at that point.

 

19 hours ago, Needfuldoer said:

If Western Digital splits on its own, "WD-HDD" will continue to exist in its current form and Kioxia can acquire "WD-SSD" free and clear.

The deal was to be a merger, which is distinct from an acquisition. I tried to dig a little more into the failed Kioxia deal. SK Hynix has an indirect share holding in Kioxia with one source saying it is worth 15%. The merger probably would not be good for SK Hynix's business, not to mention the the regulatory side could get complicated if you own a not insignificant share of a competitor.

[leadeater]

22 hours ago, porina said:

My memory isn't great, did WD have significant flash offerings before they bought out Sandisk?

No, WDC NAND share is entirely or almost entirely from SanDisk. I don't remember well what WDC had and was doing NAND wise before hand but they weren't a market player.

 

22 hours ago, porina said:

What are they setting up for by this move?

No idea, I'm not a business exec but I legit have no idea what benefit this really has. Making sure each side of the business doesn't drag the other down effecting value? Anything I can think of I just don't actually care about.