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WD overcomes Hitachi acquisition hurdle

Posted: 25 Nov 2011 ?? ?Print Version ?Bookmark and Share

Keywords:disk drive? hard drive market? WD-Hitachi deal?

The European Union's competition regulator has given Western Digital Corp. (WD) the go signal to continue with its acquisition of Hitachi Global Storage Technologies. The EC has allowed the deal, granting that WD will sell off the production operations of its 3.5in disk drives.

Back in March, WD announced its plans to buy Hitachi GST for $4.3 billion with the board of directors of both companies already approving the deal. The acquisition is said to position WD as the world's biggest hard disk drive maker, leapfrogging rival Seagate Technology, and commandeering 50 percent of the market share. Seagate currently holds 30 percent.

In order to pass through the regulatory obstacles, WD must now look for a buyer to sell its 3.5in disk drive business unit and corresponding production plant to.

"The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented," EU Commissioner Joaquin Almunia said in a statement.

Part of the agreement involves WD transferring or licensing intellectual property rights to the business unit it will be selling, as well as staff and hardware. Once this happens, the EC will remove all obstacles to the deal going through.

The Commission is also thought to have taken Seagate's recent acquisition of Samsung Electronics' hard disk drive business into account, a move which minimized the risk for anti-competitiveness by the WD/Hitachi deal.

Seagate has also emerged rather better from the devastating recent flooding in Thailand, which has had a severe impact on hard drive production in general. Seagate's Thailand plant was left relatively unscathed.

WD, however, was particularly hard hit by the flooding, with roughly 60 percent of the firm's production and 37 thousand employees within the flood zones. The firm has said it expects to see a slump in revenue as a result, predicting just $1.05 billion to $1.25 billion in the fourth quarter, down 50 percent over the $2.6 billion revenue it posted in the third quarter.

- Sylvie Barak
??EE Times



COUNTRY: United States

APP: Other manufacturing service

PUD: 22225

KW: APU, 28nm production, manufacturing process

LINK_KW: AMD, TSMC, Globalfoundries

OPTION_5: InterviewsViewpoints


ORG: Advanced Micro Devices Inc., Taiwan Semiconductor Manufacturing Company, Globalfoundries Inc.

AUTHOR: Sylvie Barak




EDITED_BY: Ara Sevilla

TITLE: TSMC to benefit from AMD's changes in strategy?

DES: Online reports have surfaced suggesting the company could scrap its 28nm APU production at Globalfoundries Inc. in order to move the manufacturing to TSMC.

Advanced Micro Devices Inc.'s (AMD) roadmap is about to see some significant changes according to sources at the company.

Online reports have surfaced suggesting the company could scrap its 28nm APU production at Globalfoundries Inc. in order to move the manufacturing to Taiwan Semiconductor Manufacturing Company (TSMC). Sources at the company have confirmed with EE Times that roadmap changes are "imminent" and that "28nm schedules aren't what we wanted." Whether those changes pertain to a switch of manufacturing partners, however, has yet to be fully substantiated.

"We will have a roadmap update in the very near term," said a source at AMD though he stressed that the firm had always kept its manufacturing options open.

"We did not get specific about our manufacturing partner for 28nm APUs for 2012, we have always said that both Globalfoundries and TSMC are strong manufacturing partners and we reserve rights to keep our options open," he said. All of AMD's 28nm discrete GPUs are already being made at TSMC.

Another source at the company told EETimes he was not surprised to hear the murmurs of manufacturing changes surface, but said any public announcements about such a change in the roadmap would be considered highly sensitive and would likely be broken to financial analysts first.

EETimes has discovered that several analysts have been invited to a recently scheduled meeting on Dec. 5th.

"Changes are coming," said In-Stat's Jim McGregor, saying a change in manufacturing partners would not surprise him in the slightest, especially with relationships between Globalfoundries and AMD growing increasingly strained.

"AMD has had so many problems with Globalfoundries this year, from low yields to low ramps and high cost," he said adding, "The relationship between the two does not seem to be providing benefit to either company at the moment."

An agreement which expires on January 1, has meant that AMD only pays Globalfoundries for viable 32nm dies, which has a financial loss for Globalfoundries based on the difficulties it has had achieving high yields. After January 1, AMD would have to go back to paying for every wafer, successful or not, something the firm may not be very keen to do.

McGregor said that should the 28nm Globalfoundries made APUs really be scrapped, it would cause a "world of hurt" for AMD, which would be left a generation behind its competition for most of 2012, making AMD even less significant in the market.

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