In the cutthroat hard drive manufacturing business, volume is king. Back in the relatively halcyon days of the mid-1980s, it is estimated that more than 200 hard drive manufacturers vied for dominance in such areas as disk density, hard drive size, speed, and latency. It is no surprise then that the industry has become consolidated as it has matured. As of last week, five tech giants ruled supreme over the traditional hard drive market. As of last Monday, that number had fallen to four.

Western Digital's (NYSE: WDC) $4.3 billion acquisition of Hitachi (NYSE: HIT) Global Storage Solutions is widely seen as a coup for the consumer hard drive colossus. By gaining valuable corporate clients and manufacturing assets, Western Digital has ostensibly expanded its market share by 20% overnight. Western Digital is admittedly chasing the allure of a lower cost structure -- CEO John Coyne has said this much outright. There is another component to the deal, however, that may slip under the radar of investors unsure of what exactly it takes to make a hard drive spin.

Marvell Technology Group (Nasdaq: MRVL), perhaps best known for supplying the wireless chips for Research In Motion's BlackBerry smartphones and Apple's first-generation iPhone, is in fact an outsized player in the hard drive industry, designing and producing the microchips that run storage devices. According to Marvell's own estimates, roughly half of its annual revenue is derived from these hard drive components, and the largest portion of those sales happen to come from Western Digital, accounting for a disproportionate 21% of Marvell's business. With Western Digital's Hitachi acquisition, Marvell is presented with a tremendous opportunity to expand its hard drive business even further. Hitachi did not previously count Marvell as a major supplier.

However, the potential downside for Marvell during this time of industry retrenchment may be substantial. For one, a business that relies too heavily on a single sector or customer has essentially placed all of its highly sophisticated silicon eggs in one basket. Contraction within an industry already wrought with challenges to the dominance of traditional storage media could potentially and significantly affect the fortunes of Marvell. Increased consolidation could also lead Western Digital to demand more favorable terms from the chipmaker -- with such a large market share and dwindling competition, Marvell may have little choice in the matter. In fact, Marvell's most recent earnings statement discloses the risks inherent in its overreliance on any particular customers: "Our sales are concentrated in a few customers, and if we lose or experience a significant reduction in sales to any of these key customers, our revenues may decrease substantially."

As the highly competitive hard drive and wireless industries continue to shrink because of mergers and acquisitions like Western Digital's, Marvell's future performance may be closely tied to the handful of companies it relies on for the bulk of its revenue stream. A war chest of nearly $2.7 billion in cash offers somewhat of an effective buffer against the typical ebb and flow of the highly cyclical industry in which Marvell operates, and a well from which new technologies will undoubtedly flow, perhaps through acquisitions of its own. However, until Marvell diversifies its customer base, the specter of real pain down the line will remain.

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Fool contributor Jeff Saginor does not own shares in any of the companies mentioned in this story. The Fool owns shares of Marvell Technology Group and Western Digital. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.