Western Digital is splitting up. The flash division and the HDD division are going their separate ways after a merger with Kioxia failed.

In 2016, Western Digital bought flash specialist SanDisk for $19 billion. In this way, one of the only two large hard drive manufacturers in the world developed into an all-round storage manufacturer that has both classic HDD storage as well as SSDs and memory cards in its portfolio. Unfortunately, the takeover wasn’t such a success: today WD announced that it plans to sell off its entire flash business. By and large, this will kill the takeover.

The separation was not Plan A for Western Digital. The company wanted to merge with the flash manufacturer Kioxia and thus become the third largest flash producer in the world. SK Hynix didn’t like this and the company feared for its market position through investors Bain Capital and others. WD would receive a majority stake in Kioxia following the merger, putting SK Hynix, which also has a stake, in a difficult situation.

Plan B

So, move on from the merger and move on to Plan B: pretend nothing has happened since 2016. The marriage between SanDisk and Western Digital will end in the second half of 2024. The separation is due to low demand for chips in general and flash memory in particular. This reality is driving consolidation in the industry.

It’s also surprising that a storage giant like Western Digital would throw in the towel so soon after taking over due to the economic downturn. The IT world has changed a lot since 2016, but largely in line with expectations. Flash remains the medium of choice for computers and servers with high I/O utilization and demand is increasing. There’s a case to be made for a strategy where both divisions go to market separately, but those arguments probably existed before $19 billion, in 2016.