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Infineon Will Sell Hard-Drive Business to LSI

Infineon Will Sell Hard-Drive Business to LSI
By Mark Long

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With the hard-drive market changing, LSI will buy the hard-disk-drive operations of Infineon Technologies. LSI wants to provide silicon solutions, while Infineon focuses on core markets. Mechanical hard drives are giving way to solid-state storage devices, which are faster at startup and eliminate head crashes.
 


Infineon Technologies has agreed to sell its hard-disk-drive operations to LSI under terms that were not disclosed. Infineon's HDD business designs, manufactures and markets chips to power and control the drives used in computers and gaming machines.

The sale, expected to close in the second quarter, is a step toward focusing on Infineon's core markets, said Vice President Sandro Cerato. "In LSI, we have found an excellent company with a mutual interest in supporting our customer base," Cerato added.

Looming SSD Migration

LSI expects the acquisition will further its goal of becoming the leading worldwide provider of silicon solutions for hard-drive makers, said LSI Executive Vice President Ruediger Stroh. "We expect the acquisition to immediately accelerate revenue with a top-tier customer, Hitachi Global Storage Technologies, while enhancing our competitive position in the desktop and enterprise space," he said.

Last August, Infineon agreed to pay $563.6 million to acquire LSI's mobility products business "to significantly strengthen our position at important mobile-phone makers," said CEO Wolfgang Ziebart. But when Infineon announced its new deal with LSI this month, the German-based chipmaker declined to elaborate.

One factor that presumably influenced Infineon make is the computer market's looming migration from chip-controlled mechanical hard disks to storage devices based on semiconductors. Research firms such as Gartner and iSuppli believe the new solid-state drives will be a disruptive technology because they are lighter, more resilient and faster than HDDs, which are also power hogs by comparison.

"With SSDs you get a much faster startup and resume, so the performance appears to be faster," said Gartner Vice President Leslie Fiering.

Moreover, head crashes on hard drives are eliminated because SSDs have no mechanical parts. "Right now, HDDs are tied with motherboards as the No. 1 source of PC failures," Fiering said.

Falling Prices

The cost of a solid-state drive can add as much as $400 to the cost of a notebook PC with 32GB of storage, Fiering noted. But that's about to change, she said.

The price of a 32GB module should fall from about $400 now to $100 within the next couple of years, Fiering predicted. "Once the price gets lower, we are going to see more manufacturers going to the new technology," she said.

SSD technology will begin to command a significant amount of market share at the expense of conventional disk drives as time goes on, Fiering said. "For mainstream notebooks, SSDs will become very desirable as prices drop," she predicted.

Fiering also expects the technology to foster the rise of a mininotebook market in the sub-$300 price range. In this fledgling mininotebook category, manufacturers will only need "to put in a few gigabytes of storage capacity," Fiering said.

"These will be targeted at the emerging economies, and for specific limited applications such as Internet access and for use in schools," she said.
 

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