Western Digital to Buy Computer Parts Maker

Moving quickly to begin serving makers of IBM-compatible personal computers, Western Digital Corp. on Wednesday announced plans to acquire Faraday Electronics, a Sunnyvale computer components manufacturer.

The acquisition, scheduled to be completed within several weeks, comes less than a month after IBM announced a new PC product line, including a model based on the most advanced personal computer technology. The move left the makers of most IBM clones without immediate sources for their own versions of the new machines.

As a result of the Faraday purchase, Western Digital Chairman Roger Johnson said, Western Digital now will provide four of the five key electronic components on the central processing board of an IBM-compatible personal computer, making the company a virtual one-stop mart for a PC’s innards.

Faraday makes integrated chip sets and writes specialized software that will allow Western Digital’s current product lines of video, communication and storage chips to work with the central brain of the computer, the microprocessor. Western Digital had been buying the products from Faraday.

According to the terms of the acquisition, Irvine-based Western Digital will pay 1.5 million of its shares for Faraday. At Wednesday’s closing price of $28 per share of Western Digital, the value of the deal is $42 million. Faraday lost about $1 million in its last fiscal year, primarily due to write-offs associated with a discontinued business, Western Digital said. Sales were $18.6 million. Western Digital officials said new orders at Faraday are being booked at the rate of $30 million per year.