Lake Forest-based disk drive maker Western Digital Corp. said Monday it’s entering the market for a new type of drive that’s gained headway in corporate networks with its $65 million buy of Aliso Viejo’s SiliconSystems Inc.
Privately held SiliconSystems makes drives that use flash memory chips for storing data on corporate networks.
Its drives are called solid state by industry insiders because they lack the spinning disk of traditional drives. Western Digital is the No. 2 maker of disk drives.
Solid state drives made of flash memory are more durable, save power and are faster at some tasks than traditional disk drives.
They’ve grabbed the attention of the top drive makers because they are quickly replacing disk drives in high-end data storage networks, notebook computers and other industry-specific devices that can’t break down.
SiliconSystem had been in talks for some time with Western Digital and top rival Scotts Valley-based Seagate Technology LLC, Chief Executive Michael Hajeck told the Business Journal last year.
Western Digital said it plans to fold SiliconSystems into a newly minted division called WD solid-state storage, with Hajeck running the unit.
SiliconSystems’ biggest customers are in telecommunications.
Its drives go into cell phone base stations on wireless networks run by Sony Ericsson Mobile Communications AB, France’s Alcatel-Lucent and Canada’s Nortel Networks Corp., among others.
The solid state drives go into a slew of industrial devices, including video surveillance systems, voting kiosks and automated manufacturing gear.
Some get sold to top-tier defense contractors for use in destroyer ships, planes and tanks.
Another niche market is “interactive kiosks,” such as digital slot machines, self-check-in stations at airports and cash registers.
The Business Journal estimates that SiliconSystems, which doesn’t disclose financial results, sees $20 million to $50 million in yearly sales.
The buy puts Western Digital ahead of Seagate in a new,but still small,market.
Industry watchers and Wall Street analysts have long speculated that Seagate could swoop in and buy another local maker of solid state drives, Santa Ana’s STEC Inc.
The speculation intensified last year when Seagate filed a patent infringement lawsuit against STEC, which had a recent market value of about $345 million.
The suit was seen by many as a shot across the bow to an upstart rival. Seagate quietly dropped the suit last month.
Another local maker of memory products, Fountain Valley’s Kinston Technology Co., announced last year it too was going after solid-state drives.
Last year it teamed up with chipmaker Intel Corp. to sell solid state drives to big companies that now buy its memory modules as upgrades for computers.
Word is that Kingston is set to announce drives for consumers later this year.
Hajeck, who has some two decades in the storage industry under his belt, founded SiliconSystems in 2002.
The company had raised venture funding from Miramar Venture Partners, Rustic Canyon Partners, Shepherd Ventures and the investment arms of Samsung Group and SanDisk Corp.
Hajeck tinkered with the first flash drives at Milpitas-based SanDisk and did stints at Torrance-based MicroNet Technology Inc. and SyQuest Technology Inc., now called SYQT Inc.
He built up and ran the business that later became STEC after the company sold off its SimpleTech consumer line a few years ago.
Western Digital’s shares were off 6% in early afternoon New York trading on a recent market value of about $4 billion.
