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TrendForce Anticipates Flash-Related Devices Becoming a Developmental Focus in China’s Semiconductor Sector Following Tsinghua Unigroup’s Deal with Western Digital


1 October 2015 Semiconductors Sean Yang

China’s state-backed technology group Tsinghua Unigroup purchased a 15% majority stake in Western Digital, a major U.S.-based maker of data storage disk drives, on September 30. This latest investment deal will strengthen China’s efforts to develop its domestic ICT equipment industries as well as gaining an important prize within the rapidly growing industry of NAND Flash-related devices.

In the past three years, participants in the data storage equipment and HDD industry have hurried to develop strategies for NAND Flash storage as this technology has steadily gained market influence. Consequently, an aggressive round mergers and acquisitions have taken place within the industry during this period, with values of transactions getting higher and higher. Western Digital is currently the quickest among its competitors in acquiring other data storage device makers and has spent over $US1.1 billion on deal-making. With wide-ranging sets of SSD and HDD solutions, the company is an attractive investment target.

“Establishing a NAND Flash industry goes beyond gaining the capability to produce Flash memory chips,” said Sean Yang, assistant vice president of DRAMeXchange, a division of TrendForce. “Application markets for data storage products need to be developed and various segments of the industry chain must link up, including system integration, software, firmware, hardware and controller chips. All of these are crucial elements to this industry’s growth. As the Chinese semiconductor sector is moving forward with setting up domestic manufacturing of data storage equipment, it will make sure that suppliers of NAND Flash chips and other related components are included in its plan. And this is also why Tsinghua Unigroup’s investment in Western Digital is a significant indicator of this recent industry trend.”

Yang further noted that prices of SSDs have fallen sharply and gradually approaching to a pricing sweet spot for PC vendors because of the rapid advances in NAND Flash manufacturing technology. Since Apple began furnishing SSDs for all of its MacBooks in 2013, its competitors have also expanded the use of SSDs in their notebooks to improve product performance and generate consumer demand. Based on DRAMeXchange’s forecast, the price difference between 128GB SSD and 500GB HDD will narrow quickly as the market penetration of 3D-NAND Flash increases. By 2016, 128GB SSD and 500GB HDD will become indistinguishable in pricing, while the price difference between 256GB SSD and 1TB HDD will also become negligible. DRAMeXchange also projects that the penetration rate of SSD-equipped models in the total worldwide notebook shipments will stand at 26% this year due to the widespread use of 3D-NAND Flash, and it will further climb to almost 36% in 2016. On the whole, the growth of SSD products will only speed up and pressure is mounting for HDD suppliers to make changes in their businesses.


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