Samsung plans to sell its hard-drive business, a new report claims.
The electronics company would like to make $1.5 billion on the sale, but it might take less than $1 billion, The Wall Street Journal is reporting, citing an anonymous source. The source told the Journal that, in no uncertain terms, "Samsung is trying to get rid of [its HDD operation]," and one of its chief competitors, Seagate, is a potential suitor.
Though Samsung has been competing in the hard-disk-drive business for quite some time, the company is still far behind the leaders in that sector. According to research firm iSuppli, Samsung's worldwide HDD market share at the end of 2010 was hovering at around 10 percent.
In that same report, which was released in March, iSuppli said that it expected first-quarter 2011 HDD shipments to hit 160.9 million, down nearly 4 percent compared to the fourth quarter of 2010, when 167.5 million HDDs were shipped. iSuppli said that "weaker industry conditions," namely the fact that smartphones and tablets don't use hard drives for their storage needs, make "organic sales growth...more difficult to achieve, prompting HDD suppliers to engage in acquisitions to gain market share."
Those acquisitions have already started. In March, Western Digital agreed to acquire Hitachi's hard-disk-drive unit for $4.3 billion. Once the acquisition is approved, Western Digital will control nearly 50 percent of the HDD business. Seagate, its closest competitor, owns about 30 percent of the market. And now it might be that company's turn to keep pace with an acquisition of its own.
According to the Journal's source, Samsung plans to use the cash it would raise in the sale of its hard-drive business in markets where it might have a better chance of succeeding. The source did not say which markets Samsung would like to focus on.
Both Samsung and Seagate declined to comment on the report.
Update at 10:10 a.m. PT to include Samsung and Seagate statements.