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Samsung ponders buying SanDisk

updated 09:55 am EDT, Fri September 5, 2008

Samsung May Buy SanDisk

Samsung is considering buying SanDisk in a deal that could reshape the storage industry, the former company said today. In acknowledging a government filing by Samsung that discusses the possibility of a deal, Samsung spokesman James Chung says the Korean firm had been considering "multiple" options for a deal with SanDisk but that hasn't committed to any particular course of action. SanDisk itself has admitted that it has talked to Samsung but claims that it regularly speaks with companies about possible agreements.

Allegations that spurred Samsung's response have suggested that the company is interested in a takeover of SanDisk primarily to expand its NAND flash memory business, which is challenged by current SanDisk partner Toshiba; acquiring SanDisk would take this partnership away and also consolidate Samsung's own ability to produce flash memory.

The move would also be a defensive gesture in a significantly less profitable market. Competition between suppliers as well as a glut of excess flash memory chips has led many companies to slash prices and reduce the profit made on sales to other firms; a smaller market would let the company protect its prices against severe drops. Samsung also currently has to license patented technology from SanDisk and could trim its costs if it owned SanDisk's designs.

Any possible deal may trigger antitrust investigations over monopoly concerns and would also likely spur a US investigation over foreign involvement in California-based SanDisk, which also produces its Sansa line of portable music players that compete against Samsung's devices.

Samsung is regularly contracted for producing flash memory in other companies' devices and is often considered a favorite customer of larger players such as Apple, which uses its storage for iPods and other devices.



By Electronista Staff
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