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Western Digital Wades Into Solid State

Stocks in this article: WDC

Western Digital (WDC) has snapped up storage component firm SiliconSystems, marking the hard drive specialist's entry into the Solid State Disk (SSD) market.

With the $65 million cash transaction, Western Digital is getting its hands on SSDs at a time when more and more storage firms are throwing their weight behind the technology.

"SiliconSystems' intellectual property and technical expertise will significantly accelerate our solid-state drive development program for the netbook, client and enterprise markets," said Western Digital CEO John Coyne in a statement.

SSDs, which offers faster data access speeds than traditional hard disk drives, have been gaining momentum in the last couple of years, with companies such as EMC (EMC), Sun Microsystems (JAVA) and IBM (IBM) all pushing the technology.

SiliconSystems sells its Silicon Drive products into the embedded systems market for servers and storage devices, as well as areas such as networking, communications, military and aerospace. Western Digital is now looking to exploit this product base, as well as SiliconSystems' cross-licensing agreement with SanDisk (SNDK),

Privately held SiliconSystems accounted for one-third of worldwide SSD revenues in 2008, according to Western Digital, which has recently enjoyed success with its 2.5-inch notebook drives.

With access to SiliconSystems' core technology, Western Digital's SSD efforts will now speed up dramatically, says Avi Cohen, an analyst at Avian Securities.

"We believe Western Digital had been focused on the SSD market already with an internal team working on developing a product organically," he wrote, in a note released Monday. "However, this deal accelerates Western Digital's time to market with the company now effectively entering the SSD market immediately."

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