Toshiba Memory Operation Could Make Huge Gains From Acquisition of Lite-On SSD Business

Taiwan’s Lite-On Technology Corp. (Lite-On) announced on August 30 that it will offload the entire stake of its SSD business to Toshiba Memory Holdings Corp. (TMCHD).

The purchase price is provisionally set at $165 million, and the transaction is scheduled to be completed by 1H20.

TrendForce’s preliminary assessment of this deal finds that Lite-On’s SSD business has significant advantages in operational efficiency and flexibility. Thus, the acquisition could be a major boon to TMCHD in terms of enhancing the range and quality of product offerings.

Alan Chen, research director, TrendForce, points out that Lite-On’s assets are highly complementary to TMCHD’s operation from the perspective of product lines and market positioning.

Currently, TMCHD’s revenue from the enterprise SSD market is mainly based on the sales of SAS and SATA products. With respect to the development of enterprise SSDs featuring PCIe, TMCHD is still catching up to the leading manufacturers. Lite-On, on the other hand, has already adopted PCIe for its main enterprise product lines. At the same time, Lite-On has accumulated considerable experience in the volume production of solutions that have gone to the major clients in the server/data center market.

TMCHD also wants to shore up its presence in the client OEM and client retail (channel) markets. It has not made significant market share gains in these two segments even after the absorption of OCZ Storage Solutions, a major brand name in the channel SSD market.

Comparatively, Lite-On lacks the cost advantage that Toshiba has in the manufacturing of client SSDs. It nevertheless has maintained a solid reputation in the client OEM and client retail markets due to its R&D capability in the software area and flexibility in production planning.

TrendForce believes that TMCHD could benefit enormously from this deal if it is able to formulate the right marketing strategy, establish a clear division of labor, and effectively integrate the R&D capabilities of both sides.

In sum, TMCHD’s operation, which draws from a deep well of NAND flash resources and expertise related to product testing on the clients’ side, can be further strengthened by Lite-On’s software how-know, efficiency, and flexibility. The effect of this merger may therefore be much greater than the sum of the parts.

Read also:
Toshiba Memory Acquired Lite-On SSD Business
Purchase price: $165 million
September 2, 2019 | Press Release