Samsung has signed a NAND flash memory supply agreement with solid state drive firm Seagate Technology, writes Richard Wilson.
The flash agreement is part of a wider strategic relationship between the two companies.
Samsung is combining its hard disk drive (HDD) operations into Seagate.
The two companies also extended an existing patent cross-license agreement.
As a result Seagate will pay Samsung approximately $1.375bn, which will be paid in the form of 50% stock and 50% cash.
"With these agreements, we expect to achieve greater scale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung," said Steve Luczo, Seagate chairman, president and CEO.
Seagate has secured a source of supply for NAND flash supply.
The transactions and agreements significantly expand Seagate's customer access in China and Southeast Asia.
In connection with its strategic alliance with Samsung, Seagate expects also to strengthen its relationship with TDK/SAE Magnetics Ltd.
Seagate and Samsung began a joint development agreement in August 2010.
"Samsung looks forward to extending our existing strategic ties with Seagate, to deliver creative technology solutions for a broad diversity of consumer, business and industrial applications," said Oh-hyun, Kwon, president of the semiconductor business of Samsung Electronics.
Seagate expects these transactions and agreements to be meaningfully accretive to non-GAAP diluted earnings per share and cash flow within the first full year following the closing.
Seagate said it does not expect any material restructuring costs in connection with them.
This story first appeared on www.electronicsweekly.com