Having been an early mover in the enterprise flash controller market, Integrated Device Technology (NASDAQ:IDTI) decided it was time to cash in on those investments and focus its R&D instead on advanced communications and computing markets.
It announced this morning it was divesting itself of its PCI Express enterprise flash controller business, and all the attendant intellectual property that goes with it, to PMC-Sierra (NASDAQ:PMCS) for $100 million in cash, though there may be certain price adjustments.
Separately, PMC announced that the acquisition will accelerate its entrance into the enterprise solid-state drive market with leading-edge PCIe flash controllers, including the world's first NVM Express flash controller. It notes that the rapidly expanding enterprise SSD segment is expected to comprise half of the total SSD market in sales, hitting approximately $7 billion in 2016.
IDT President and CEO Ted Tewksbury said:
The divestiture of our PCIe flash controller business enables IDT to capitalize on our early investments in this disruptive technology. Going forward, we will focus our R&D investments on advanced timing, wireless power, memory interface, and communications signal chain solutions. This enhanced focus will accelerate operating margin expansion while sustaining long-term revenue growth.
Noting that IDT's flash controllers complement its own product lineup, PMC President and CEO Greg Lang said: "Flash-based storage is causing a major disruption in enterprise storage [because of] the dramatic performance advantages of solid-state drives. IDT's PCIe controllers are particularly well suited for server-based SSDs targeted at cloud data center customers."
The boards of directors of both companies have approved the transaction, which is expected to close in the third quarter. Integrated Device Technology reported revenues of $487 million over the past 12 months. PMC-Sierra had revenues of $524 million over the same time period.
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