April 27, 2024

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[THE INVESTOR] South Korea’s second-largest chipmaker SK hynix is expected to set up a joint company on solid-state drives with US data storage company Seagate, according to news reports on Dec. 14. 

The company admitted that it was considering a joint venture but declined to further elaborate on more details, including the partner.  

"Nothing has been finalized yet," the company said in a regulatory filing on the day. 

According to news reports, SK hynix is expected to hold a 51 percent share in the new entity, while Seagate will hold the remaining 49 percent. 

Demand for solid-state drives, or SSD, bulk storage devices used for computers or laptops, has been quickly growing globally, with around 40 percent of this year’s laptops expected to adopt the drives.

Research firm IHS predicted the global SSD market would rise 6 percent on the annual average to around $18 billion by 2020 from $14.1 billion last year.

SK hynix, which is a latecomer to the SSD segment, currently has only 2 percent market share, coming in at No. 11. Samsung Electronics retained the top position with a 38 percent share, followed by Intel with 14 percent and SanDisk with 10 percent.

When the joint company is created, SK hynix is expected to secure solution development capacity in terms of controller and firmware, which are key technologies for SSD, analysts said.

Also, SK hynix may become a key supplier of its NAND flash memory to Seagate, which has mainly been provided by Samsung Electronics.

Seagate, for its part, is able to strengthen its memory capacity in partnership with SK hynix. SK hynix is the fourth-largest NAND flash memory provider globally following Samsung Electronics, Toshiba and SanDisk.

Seagate also had a strategic partnership with Samsung Electronics in 2011 when it acquired a hard disk drive division from the Korean tech giant, selling its 9.6 percent stake. On September of this year, Samsung sold all of its Seagate stake, but they still maintain a supply partnership for NAND flash memory.

Following speculation on creating a joint company, SK hynix’s shares rose 1.78 percent from the previous day to trade at 45,750 won ($39.10).

By Shin Ji-hye/The Korea Herald (shihjh@heraldcorp.com)