Samsung looking to buy SanDisk?

Samsung Electronics, the world's top maker of memory chips, said it may buy flash memory maker SanDisk, which is valued at $3.2 billion (£1.8 billion), in a deal that could reshape a struggling industry.

An acquisition of SanDisk would expand Samsung's market share at a time when prices for flash memory, used in such products as digital cameras, cell phones and music players, are falling sharply. The deal would also reduce Samsung's licensing costs by assuming control of SanDisk's popular technology.

"We are looking at various opportunities regarding SanDisk, but nothing has been decided yet," Samsung spokesman James Chung told Reuters in response to reports the South Korean firm was interested in the US maker of flash memory, which is widely used in storage devices and digital gadgets.

In a regulatory filing later, Samsung said one of its options would be an acquisition of SanDisk, whose shares jumped 24 per cent in pre-open trade on Friday.

Analysts said an acquisition could shift the balance of power in the flash memory industry away from Japan's Toshiba, which trails Samsung in the flash market but plans to nearly double its chip production capacity in partnership with SanDisk.

"Samsung buying SanDisk would mean big damage for Toshiba," said Yoshihisa Toyosaki, head of IT research firm J-Star Inc.

Shares in Samsung closed up 1.2 per cent after gaining more than three per cent, outperforming a 1.6 per cent fall on the wider Seoul share market.

Toshiba's shares fell 4.6 per cent to their lowest level since November 2005.

In a brief statement, SanDisk said it "periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities," but declined to comment further.

Online news provider eDaily on Friday said Samsung was interested in acquiring SanDisk, whose shares have been mauled by a steep downturn in the memory market. It said Samsung had retained JPMorgan as an adviser.

Samsung, which pays SanDisk 400 billion won (£200 million) a year in licensing fees, is looking to reduce that cost through the acquisition, eDaily reported.

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