Solid-state drive (SSD) maker OCZ Technology Group announced this week it has signed an agreement to acquire privately-held Indilinx, a maker of popular NAND flash controllers, for $32 million.
OCZ expects to close the all-stock buyout of Indillinx in the next 30 days.
Based in South Korea, Indilinx sells its line of flash controllers to SSD manufacturers and computer system manufacturers. OCZ has had a long-standing relationship with Indilinx and has used its controllers in its SSDs since December 2008.
Indilinx competes directly against SandForce and Marvell, both in California, and Taiwan's JMicron Technology. Some of the leading SSD manufacturers, such as Samsung Electronics and Intel, make their own controllers.
"I think it's a win-win for both companies as OCZ taps into the engineering and development talent of Indilinx as OCZ is looking to expand its business around SSD for their future," said Michael Yang, an analyst with memory and storage research firm IHS iSuppli. "From a technical perspective as well as from a cost reduction standpoint, it's a plus for OCZ."
Yang said the proposed buyout is an early sign there will be further consolidation in the SSD market, "both vertically, such as in the case of OCZ and Indilinx, and attrition of SSD suppliers.
"SSD will become more enterprise- and performance-driven in the near term and as such, companies with technology in hardware, firmware and software will rise to the top," he said.
OCZ said in a statement that it expects Indilinx's technology will allow it to expand its presence in the embedded, hybrid storage and industrial markets. "OCZ will gain substantial intellectual property from Indilinx, including approximately 20 patents and patent applications related exclusively to the business as part of the transaction," OCZ said.
For example, the acquisition is expected to extend OCZ's capabilities involving advanced controller technology, including Tinkerbell, a high-performance embedded multimedia card controller that replaces SSDs in consumer electronic devices such as smartphones, tablet PCs, GPS units and netbooks.
According to OCZ, Indilinx will continue to supply its line of controller products to other SSD and system manufacturers. The Indilinx controller business, and its 45 employees, will remain intact under the leadership of Bumsoo Kim, the founder and president of Indilinx, and Hyunmo Chung, Indilinx's CTO.
At the same time, OCZ said it plans to continue using controllers from other manufacturers, including long-term partner SandForce. OCZ uses SandForce's controllers in its Vertex 2, Agility 2, RevoDrive, customizable Deneva enterprise drives, as well as in the upcoming Vertex 3 family of SSDs.
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