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Western Digital pays $65M for solid-state drive maker

Western Digital Corp. announced today that it has completed a $65 million cash acquisition of SiliconSystems Inc., a small, Aliso Viejo, Calif.-based maker of solid-state drives.

The acquisition brings Western Digital, the world's second-largest manufacturer of hard disk drives, into the fast-growing solid-state drive market for the first time. SiliconSystems sells solid-state drives with SATA, EIDE, PC Card, USB and CF interfaces in 2.5-in., 1.8-in., Compact Flash and other designs. The embedded drives are targeted at the enterprise market.

“SiliconSystems' intellectual property and technical expertise will significantly accelerate WD's solid-state drive development programs for the netbook, client and enterprise markets, providing greater choice for our customers to satisfy all their storage requirements,” said Western Digital CEO John Coyne.

Founded in 2002, SiliconSystems has about 65 employees and said it has sold 4 million SiliconDrive products to the network communications, industrial, embedded computing, medical, military and aerospace markets.

Gregory Wong, president of consulting and market research firm Forward Insights, said in a blog that Western Digital's branding and client relationships could make it a formidable solid-state drive vendor, and it “validates the market opportunity provided by SSDs.”

“This acquisition will compel [hard disk drive] suppliers to review their own internal development plans and may be the first, with others to follow,” he wrote.

Seagate Technology LLC, the world's largest hard disk drive manufacturer, has also not yet produced a solid-state disk drive.

The SiliconSystems product portfolio also includes a number of firmware and software products for protecting data, such as its PowerArmor for error correction, SiSmart for self-monitoring and SiSecure for monitoring user access.

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