History: Samsung Exists HDD Business to Concentrate on Flash

Samsung Electronics Co. Ltd. announced that the sale of the HDD division of Samsung to Seagate Technology plc was completed on December 19, 2011 but it took several years, until 2015, to get approval of China’s Ministry of Commerce (MOFCOM).

Samsung entered into HDDs around twenty years ago to fill its own computers but also to sell them to outside customers. Probably never profitable in this activity, it also never was a power here, being at this time the smallest manufacturer with market share between 7% to 8% or roughly 13 million units per quarter, behind WD, Seagate, Hitachi GST and Toshiba, and in front of tiny Chinese ExcelStor.

The company has a small plant in Gumi, South Korea, the bulk of its HDDs being assembled by subcontractor SAE/TDK in Donguan, China. All the components come from outside firms, including Showa Denko and Fuji Electrics for disk platters and SAE/TDK for heads.

Samsung doesn’t not produce enterprise HDDs, only 3.5-inch desktop, 2.5-inch laptop devices and a very small number of 1.8-inch units. Its strongest position was in notebook HDDS being produced in quantities twice more than 3.5-inch devices. The Korean firm also designs and sells external 2.5-inch (M2) and 3.5-inch (M3) hard drives (M3) with USB 2.0 and 3.0 interfaces.

The jewel in Seagate’s basket is the internal SpinPoint M8 at 500GB per disk to get 1TB notebook units in standard 9.5mm height. Toshiba and WD already launched the same units, but Hitachi GST and Seagate are late in technology for this product to be the flagship one of the industry in 2012.

Concentrating now on flash memories only for storage, Samsung is selling its HDD business to Seagate after getting approval of regulatory bodies for $1,375 million, including $687.5 million in cash, the difference being in share transaction, Samsung getting a 9.6% equity – sold in 2016 – and a seat on Seagate’s board. The two companies also sign a supply agreement: Samsung will provide Seagate with flash products for use in enterprise SSDs and hybrid drives; Seagate will supply HDDs to Samsung for PCs, notebooks and CE devices.

Seagate has not released official information concerning the integration of Samsung HDD business but StorageNewsLetter.com got some of them from French Jean-Louis Cazenave at Seagate since 1997 and promoted in 2008 executive sales director for South and East Europe and global accounts and continuing as managing director of the French office: “We will keep their line of notebook drives, especially their M8, currently in production and at 500GB per platter. We have 500GB on only two platters. We will continue also the M7, its small brother, for three to six months. But we are leaving aside their 3.5-inch HDDs.”

“We will keep a strong autonomy of their activity,” he added. “But they have currently the same difficulties to get their components.”