Seagate and Samsung reportedly pursuing hard drive deal

Samsung is reportedly in talks with Seagate on a deal which would see the Korean electronics giant drop its struggling hard drive business.

A report in The Wall Street Journal cited unnamed sources familiar with the matter in reporting that the deal could be worth $1bn to $1.5bn and will give Samsung an infusion of cash to spend in other areas.

Samsung has long been a leader in the flash memory chip market, and recently expanded its mobile device operation with the release of the Andrdoid-based Galaxy Tab.

Samsung and Seagate have previously partnered on storage platforms, including a 2010 deal to develop sold-state drives.

The latest deal would also boost Seagate's share of the hard drive market. Recently, rival Western Digital made a splash when it agreed on a $4.3bn merger with Hitachi DST.

Enderle Group principal analyst Rob Enderle suggested that an acquisition would help Samsung to quit the loss-making magnetic storage market while providing Seagate with a valuable asset to fend of Western Digital.

"Seagate is having real trouble keeping up with Western Digital and likely wants this additional business so they are a stronger alternative. But magnetic drives are a tough business to be in right now and Western Digital is close to cornering the market," he told V3.co.uk.

"The removal of a major competitor who had been competing on price could stabilise prices a bit, but Samsung and Western Digital have been going at it pretty hard so I'm not sure we would notice the difference."