History (1994): SyQuest Buys 4% of French Disk Head Maker Silmag

SyOuest Technology (Fremont, CA) has invested FF10 million (or $2 million) to take a 4% ownership in Silmag SA (Grenoble, France), designer of silicon planear heads for HDDs.

The US company intends to use these heads in the future to augment the memory capacity of its removable disk drives.

The operation is part of Silmag’s second financial round to increase its capital, up from FF65 million to FF100 million.

Former shareholders, the French investor Finnovelec and Sofinnova and the Italian firm Microphi, participated in the operation, joined by newcomers, Teknecomp, an Italian industrial holding firm that invested FF15 million, and SyQuest with a FF10 million purchase.

But isn’t it risky for a head media manufacturer to have as a probable future client one of its shareholders, likely to frown upon deals with prospective competitors?

Olivier Protard, member of the board of Silmag for Sofinnova replied: “SyQuest is above all a company that believes in new technology. And it is only active in removable disk drives, a niche market, in which it represents nearly 65% of the whole. The other major player in this field is Iomega, but for now, they are not interested in planear heads. Of course, we would have been more hesitant had it been an HDD producer.“

“Silmag is currently in the final stages of qualifying its products. Contracts should be faffing in to place in the upcoming months. Since our agreement with IBM, no one thinks of Silmag’s technology as exotic any more Silmag currently has 3 clients, including SyQuest, MiniStor and a third big HDD manufacturer that can’t be named yet,” he added.

“French investors were early shareholders of SyOuest and today, France is one of our major markets,” said SyQuest president, COB and CEO, Syed lftikar.

Sofinnova was one of the first investors in SyQuest, via a US partner.