Western Digital to Create Two Separate Companies, One for Hard Drives and One for Flash Memory

The division will create two companies focusing on the hard drive and flash memory markets. This strategic move aims to increase the performance and competitiveness of each business by providing them with a sharper focus on their respective market segments. Western Digital (WDC.O) is a leading storage technology company with over 27 years of experience expanding storage possibilities. In the past three decades, the company has transformed from a supplier of traditional IT computing products to a leader in advanced flash-memory-based storage solutions for mobile devices and data centers.

WD merged with SanDisk in 2016 and has since expanded into the world’s third-largest maker of NAND flash memory chips. The company’s flash business includes everything from consumer flash cards and USB drives to SSDs for PCs. Combined with its strong position in the high-performance hard disk drive market, the company provides a broad portfolio of storage solutions for both consumer and enterprise markets.

Western Digital is also a top maker of hard disk drives, competing with Seagate Technology (STX). Its HDD sales have slumped over the past few years as consumers migrate to laptops and tablets that store their data on solid-state storage rather than magnetic discs. The company’s HDD business will decline in 2022, mainly due to weak PC demand.

Western Digital’s decision to split its business follows months of talks with Kioxia, which stalled earlier this year due to opposition from Kioxia investor SK Hynix. A merger would create a powerhouse force in the NAND flash market, with a combined share of 35.4 percent that would rival Samsung Electronics (SSNHY) as the world’s biggest maker of memory chips.

The new company will include WD’s hard disk and flash businesses, which will be listed on the Nasdaq stock market. The company launched a review of its operations last year after activist investor Elliott Management disclosed a stake of nearly $1 billion in Western Digital — representing about 6 percent of its shares — and pushed it to separate those businesses. The company complied with Elliott’s request to conduct a full review of structural options for its flash and hard-drive business units. The company says the review is focused on maximizing value for shareholders. The company also has a long-term investment in the future of storage technology and continues to invest heavily to develop the next generation of high-performance flash and hard-disk solutions, it said. Shares in Western Digital rose more than 12% before the bell. The stock has gained 20% this year. — By CNET’s Mike Wenzel.

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