Samsung sells hard disc business to US firm

April 19, 2011
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, SEOUL, Aprl 19 – South Korea\’s Samsung Electronics said Tuesday it would sell its hard-disc-drive business to US firm Seagate Technology for $1.375 billion in cash and stock.

The deal would help Samsung, which held about a 10.7 percent share of the global hard-disc-drive (HDD) market in the fourth quarter, unload a money-losing business and focus on more profitable areas.

Samsung, the world\’s largest maker of memory chips and flat-screen televisions, achieved a record second-quarter operating profit of 5.01 trillion won ($4.6 billion) last year but its earnings have been falling since then.

Samsung said it would receive a 9.6 percent stake in Seagate and $687.5 million in cash in return for transferring its HDD unit.

The two companies also agreed on a set of strategic partnerships. Samsung will supply NAND flash memory chips to Seagate\’s solid state drives and other businesses.

The US company will provide disk drives to the South Korean giant. A Samsung executive will join Seagate\’s board.

The deal would help Seagate strengthen its competitiveness against US rival Western Digital.

In March, Western Digital agreed to buy Hitachi\’s hard-disc-drive business for about $4.3 billion in cash and stock, a deal that created a dominant player with a nearly 50 percent market share.

"We are pleased to strengthen our strategic relationship with Samsung in a way that better aligns both companies around technologies and products," Seagate chairman Steve Luczo said in a joint statement.

He said Seagate is expected to deliver "a broader range of innovative storage products and solutions" to customers.

According to market research firm iSuppli, Seagate had roughly 32 percent of the HDD market in the first quarter of this year. With Samsung\’s HDD business, its share would reach about 40 percent.

Disk drives have been a mainstay of the computer industry since the early 1980s. But the industry is under pressure from the success of Apple\’s iPad and other tablet computers, which store data on flash-memory chips.

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