The value of the SanDisk acquisition will depend on the closing and approval of an investment from a unit of China's state-backed Tsinghua Holdings, Unisplendour in Western Digital, the companies said in a statement on Wednesday.
"The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry," Western Digital CEO Steve Milligan said in a written statement.
Milligan will serve as CEO of the combined business, which will keep its headquarters at Western Digital's Irvine, California location.
The semiconductor industry has seen a record number of transactions this year as demand for cheaper chips and products to power Internet-connected gadgets push technology companies to consolidate suppliers.
The deal is expected to add to Western Digital's adjusted earnings within the first 12 months of its closing.
The company said it expected to enter into new debt facilities totalling $18.4bn, including a $1.0bn revolver, a portion of which will be used to fund the deal.
The deal is expected to close in the third calendar quarter of 2016.