Posted by: Ihlwan Moon on October 22, 2008
Samsung Electronics on Oct. 22 withdrew its $5.85 billion bid to buy SanDisk, citing a declining value of U.S. memory card maker in the face of a supply glut in the memory chip market. The news came hardly as a surprise as SanDisk sought a higher price while there were no signs its business would improve any time soon after it reported a third quarter loss.
However, the move doesn’t necessarily mean the Korean electronics company has ended its interest in SanDisk. Samsung has a big stake in NAND flash memory chips (used to store data in digital cameras, music players and other portable gadgets) and SanDisk has hundreds of patents in the U.S. and overseas for the chip technologies. Samsung, the No. 1 flash-chip maker with more than 40% market share, pays SanDisk hundreds of millions of dollars annually to license those patents. SanDisk is also the world’s largest supplier of memory cards that use such chips.
Samsung has repeatedly said it will continue to invest multi-billion dollars in memory chips as it sees the current slowdown a chance to expand its presence in an upturn. “I continue to believe that a combination of our two companies would have created a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the market place,” Samsung Chief Executive Lee Yoon Woo said in a letter to SanDisk Chairman Eli Harari, notifying the Korean company’s decision to end its six-month bid to acquire the U.S. firm.