OCZ Grows Up, Signs Definitive Agreement to Acquire Indilinx
by Anand Lal Shimpi on March 14, 2011 9:05 PM EST- Posted in
- IT Computing
- Storage
- SSDs
- OCZ
We first met Indilinx in early 2009, with its Barefoot controller at the heart of OCZ's Vertex SSD. Until SandForce showed up in 2010 with the SF-1200/1500 series of controllers, the Indilinx Barefoot was the cheaper alternative to Intel. If it wasn't for Indilinx I'm not sure Intel would've had any real competition until last year.
The OCZ/Indilinx relationship was always a close one, but it's about to get a lot closer. Today OCZ announced that it has signed a definitive agreement to acquire Indilinx Co., Ltd for ~$32M in OCZ shares. The deal is expected to close within 30 days.
Why would OCZ acquire Indilinx? To be honest, it's the only way to ensure growth in the future. While OCZ is currently the retail/channel face of SandForce, SF also happens to sell to all of OCZ's competitors. OCZ may get early access to SandForce hardware, but so could anyone else who shows up with a big enough check. Ultimately to stick around in this business OCZ needs to be able to build its own controller and that's what the Indilinx acquisition is designed to allow.
Indilinx was working on its first 6Gbps controller codenamed Jet Stream, however the design never surfaced. Delays do happen in chip design and I'm guessing Indilinx just couldn't make it happen with Jet Stream.
What does this mean for SSDs today? Probably very little. OCZ will continue to ship SandForce based drives, however at some point I'm expecting to see an exclusive OCZ branded controller. While this move will likely guarantee OCZ's ability to differentiate amongst its smaller competitors, I'm not entirely convinced it will be enough to compete with the likes of SandForce. We've even seen Intel struggle with that battle.
Anything can happen though. Two years ago I didn't expect anyone other than Intel to dominate SSDs. A year ago it was SandForce. By this time next year anything could happen.
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Titi2.01 - Tuesday, March 15, 2011 - link
Indilix is probably not able to compete last generation controllers, but they surely can issue a SF1200-class controller by the end of the year, making OCZ able to propose fast enough SSDs for OEM and common PC users for a fairly low price.Can't wait \o/
rahvin - Tuesday, March 15, 2011 - link
But how can they beat Micron and Intel's joint venture IMFlash at flash prices? Right now IMFlash is like 6 months ahead of everyone else on process technology and volume production and as a result intel and micron can both undercut prices on everyone else if they wanted. Because of shortages they are using the advantage at the high end for better performance but they still have a pricing advantage against everyone else.Ultimately the price of the controller is negligible against the cost of the flash. I don't think buying indilinx was a good idea, if they had the money it would have probably been better spent on some joint venture Fab with a flash producer, although 32 million wouldn't be even a drop in the bucket.
There is also the issue that other producers are likely to move into this market. TI, Marvel and others have been eyeing the market. Marvell already made their move but TI is still out there with the potentially to drop a major chip on the market. Personally I think there were a lot of better ways they could have spent 32 million, even if it was all just printed stock certificates.
Shadowmaster625 - Friday, March 18, 2011 - link
They dont need to, because they can beat intel on margins. What does it cost Intel to make an 80 gig SSD? Probably $80, right? And they sell them for twice as much and then some. I'm sure OCZ could thrive on half those margins.Zap - Tuesday, March 15, 2011 - link
OCZ does not have a good track record with companies it acquires. Previous acquisitions include Hypersonic and PC Power & Cooling.nonzenze - Tuesday, March 15, 2011 - link
OCZ promised availability after CEBIT. Cebit is over, where are the drives? These mushy launches are starting to grate, it's becoming hard to plan and give advice.Maybe we should start talking about launches in terms of when I can actually order the bloody drive from Newegg?
PandaBear - Tuesday, March 15, 2011 - link
Seriously, for someone that has been shipping a couple generation of controllers, $32M is very low price, at this value either someone buy them up just because, or they will go by themselves. I imagine Indilinx doesn't have enough money to finish the next gen controller so they have to either sell themselves quick or just fold. The big boys don't need them, and OCZ happens to want something for cheap or just try its luck. They probably will be used as a low end controller as I imagine they won't spend big $$ to continue development, now that no one else will buy from OCZ / Indilinx.I was surprised other companies like Phison, Samsung, Toshiba, Micron, Marvell, SanDisk, etc who has already some controller design or NAND FAB didn't buy them. Selling to a generic drive maker seems to be a desperate move on Indilinx part.
darckhart - Tuesday, March 15, 2011 - link
i cant wait for something new from indilinx! hopefully jetstream or whatever's newer. as long as it's different than sandforce. make it so, ocz!lili75 - Monday, March 21, 2011 - link
welcomelili94 - Wednesday, March 23, 2011 - link
welcome