OCZ shook up the solid state drive industry on Monday evening by announcing plans to acquire Indilinx Co., a privately held fabless provider of flash controllers and software for SSDs. What makes this business transaction so surprising is that OCZ is heavily invested with SandForce for its performance oriented consumer SSDs, and Indilinx, which builds the Barefoot controller, is a competitor to SandForce. Does this mean OCZ will be dumping SandForce?
Not a chance, says OCZ. The company said it plans to continue "utilizing controllers from other manufacturers," including SandForce, which has built controllers for OCZ's Vertex 2, Agility 2, RevoDrive, Deneva enterprise drives, and upcoming Vertex 3 products. So if OCZ plans to keep using controllers from other manufacturers, then why invest in Indilinx?
"This transaction is an important step in OCZ's strategy and significantly enhances our ability to capitalize on the worldwide demand for solid state drives," said Ryan Petersen, CEO of OCZ Technology Group. "This combination brings together two organizations that are committed to advancing solid state drive design, and provides a unique opportunity for OCZ to increase both customer and shareholder value as well as expand our reach into embedded markets."
What Petersen is really saying is that the transaction simply makes sense. You might recall that OCZ recently ducked out of the DRAM market to focus its efforts on the much more profitable SSD sector. Purchasing a controller company is logical next step for OCZ, and it's not as though the two firms aren't already acquainted. OCZ has been using Indilinx controllers since December 2008, and they're currently found in the Z-Drives series of PCI-E based SSDs.
Under terms of the deal, OCZ will hand over $32 million of OCZ common stock. The transaction already received approval by the board of directors for each company and is expected to close in the next 30 days. Once everything becomes official, OCZ says it will retain all 45 Indilinx employees and will continue to crank out controllers to SSD makers and OEMs.