Now that Western Digital is executing on plans to split itself into separate HDD and NAND businesses, today it provided the latest update on the status of that split, as well as the company’s next steps. Western Digital, whose ultimate goal is to separate the company into two independent public companies, has made significant progress on key transaction projects and also announced initial leadership appointments for the post-spin business.
Western Digital announced the spin-off on October 30, 2023, with the aim of creating two focused companies with different product lineups in hard drives and NAND flash memory, as well as NAND flash memory-based products. Western Digital said the move is expected to accelerate innovation and lead to new growth opportunities. At the same time, Western Digital management claims that due to independent capital structures, the two entities will operate more efficiently than the combined company.
Western Digital led the consolidation in the storage industry by acquiring HGST, several SSD and flash memory companies in the early 2010s, and SanDisk in 2016 to make NAND flash memory. As a result, in the late 2010s, the company became a media-agnostic, vertically integrated storage technology company. However, the company faces challenges in growing revenue. The 3D NAND and SSD markets are highly competitive commodity markets, so they tend to fluctuate based on supply and demand. At the same time, demand for HDDs is declining and is being offset by 3D NAND-based products and near-line HDDs to offset the challenges posed by declining unit sales. At the same time, Western Digital had to divest its storage solutions to avoid competing with large storage solution providers such as Dell, HPE, and IBM, which purchased Western Digital’s HDDs, SSDs, and NAND memory. added challenges.
As a result, Western Digital’s HDD and NAND businesses have largely operated independently since late 2020, when it became clear that the combined company would fail to outperform the Western Digital and SanDisk units combined. To date, considerable progress has been made in preparations for the spin-off, including establishing legal entities in 18 countries, preparing independent financial models and completing preparations for regulatory filings. As a result, the company remains on track to complete the spinoff in the second half of this year, according to Western Digital.
Regarding post-spinout leadership, David Goeckeler has been named CEO-designate of the NAND flash spinoff company. He expressed enthusiasm for the NAND business’s potential for market growth and the development of new memory technologies.
“Today’s announcement highlights the important steps we are taking to complete an extremely complex transaction involving more than a dozen countries, covering data storage technology brands, serving consumers, professional content creators, the world’s leading equipment OEMs and the largest cloud providers.” David Gockler, CEO, Western Digital. “I am pleased with the excellent work the separation team has done to date in creating a spin-ready foundation that will ensure the successful transition of our Flash and HDD businesses into independent, market-leading companies.”
At the same time, Irving Tan, currently executive vice president of global operations, will serve as CEO of the independent HDD company, which will continue to operate under the Western Digital brand. It’s unclear where Ashley Gorakhpurwalla, currently head of WDC’s hard drive business unit, will go, or even if she will stay at the company.
“Once the separation is complete, both Western Digital companies will have the strategic focus and resources to pursue exciting opportunities in their respective markets, but the Flash business offers the best opportunity with market growth potential and emerging developments in disruptive new storage technologies. Exciting possibilities.” Goeckler. “I’m very much looking forward to what’s next for the spin-off team.”