Chipmaker PMC-Sierra, Inc. (PMCS) said after Wednesday’s closing bell that it has agreed to terms to acquire PCI Express, the enterprise flash controller business of Integrated Device Technology, Inc. (IDTI) for $100 million, in a move to establish a stronger position in the fast-growing enterprise solid-state drive, or SSD, market. PMC-Sierra is also buying certain PCI Express switch assets from Device Technology as part of the deal.
PMC-Sierra estimates that the acquisition of IDTI’s technology and team will shave about two years off its time to market due to early product leadership and a robust design win pipeline, including wins spanning tier one datacenter, original equipment manufacturer and SSD customers. PMC-Sierra sees the additional technologies as a complement to its current offerings that cover optical networks, mobile, processors and storage products, including 12 Gb/s SAS SSD controller products.
"Flash-based storage is causing a major disruption in enterprise storage due to the dramatic performance advantages of solid-state drives," said Greg Lang, president and chief executive of PMC-Sierra in a prepared statement. "IDT's PCIe controllers are particularly well suited for server-based SSDs targeted at cloud data center customers,” he added.
Separately, IDT said that the divesture enables the company to capitalize on its early investments in the technology. President and CEO Ted Tewskbury explained that the company will focus its R&D investments on advanced timing, wireless power, memory interface and communications signal chain solutions, a plan that is expected to increase profit margin and long-term revenue.
International Data Corporation reported that the enterprise SSD market segment is expected to make-up half of all SSD market sales projected at $14 billion in 2016. PMC-Sierra said it expects the combined PCI express and SAS controller market for the SSD market to grow 300 percent to more than $500 million in that same timeframe.
The boards at both PMC-Sierra and Integrated Device Technology have approved the transaction, which is expected to close in the third quarter.
Shares of PMCS were unchanged in extended trading after closing the day ahead by 2 cents at $5.91. Shares of IDTI were essentially unchanged as well, closing Wednesday trading at $8.19, down 12 cents on the day.
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