Apple is reportedly in talks to acquire solid state drive (SSD) controller technology specialist Anobit for $400 million to $500 million. It would be Apple’s first acquisition of a hardware company since its 2008 acquisition of fabless semiconductor firm P.A. Semi.
The report of Apple’s interest in Herzliya, Israel-based Anobit first surfaced in the Israeli newspaper Calcalist, which said Apple (NASDAQ:AAPL) was negotiating with the founders of the privately held company: Ehud Weinstein, Ariel Maislos and Ofir Levy.
Anobit, founded in 2006, supplies mobile SSD controller technology used in smartphones and tablets — including Apple’s iPhone and iPad, as well as its MacBook Air. It also supplies enterprise-class MLC-based SSDs.
Anobit’s most notable technology centers on its signal processing capabilities. The company’s Memory Signal Processing (MSP) technology leverages proprietary signal processing algorithms and advanced error correction (ECC). Anobit says the technology drives the endurance and performance of SLC-based SSDs using multi-level cell (MLC) NAND flash and next-generation triple-level cell (TLC) NAND flash.
“Put simplistically, Anobit’s controller technology focuses on signal processing to increase the signal-to-noise ratio, which is important as electrical interference increases as NAND process technology moves forward,” explained Stifel Nicolaus Analyst Aaron Rakers.
Brian Marshall, IT hardware and data networking analyst with International Strategy & Investment Group (ISG), said the deal for the hardware company, although unusual, makes sense for the company. In 2008, Apple acquired fabless semiconductor specialist P.A. Semi to engineer custom chips for its tablets and smartphones.
“If true, this deal would make strategic sense to us considering Apple’s philosophy of vertical integration and current use of Anobit’s technology,” Marshall said. “We believe Anobit’s key asset is their embedded consumer flash controller technology called MSP, used in smartphones and tablets.”
But Stifel Nicolaus’s Rakers suggested that Anobit’s enterprise-class SSD portfolio might also play a role in Apple’s thinking and be a further indication of controller technology in the SSD market.
“While we believe investors will be mostly focused on Apple’s ability to vertically integrate the MSP technology across its product portfolio, we would note that Anobit has pushed its MSP technology capabilities into the enterprise-class SSD market with its Genesis SSDs,” Rakers said. “While Anobit’s run rate is not known, such an acquisition would most likely represent yet another hefty multiple being paid for NAND controller IP.”
He added, “We believe this yet again highlights the importance of controller technology in the SSD market—especially as the industry looks to move to next-generation sub-20nm MLC NAND and TLC going forward; signal quality becomes increasingly more important.”