April 27, 2024

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[THE INVESTOR] Japanese chipmaker Toshiba’s plan to separate its memory chip business will help solidify the leadership of Korean chip companies Samsung Electronics and SK hynix, according to market analysts on Jan. 31.

“If Toshiba’s restructuring process undercuts the competitiveness of the firm in the NAND flash memory sector, Samsung and SK hynix can benefit from it,” said Lee Jeong, an analyst from Eugene Investment & Securities in an investment report, citing the robust growth of Samsung and SK hynix in the DRAM segment after the downfall of former DRAM powerhouses Qimonda of Germany and Elpida of Japan.

Toshiba announced on Jan. 27 that it would try to spin off and sell part of its memory division, presumably, to Western Digital, a US storage system firm.

A trailblazer in the NAND flash memory chip segment, the Japanese chipmaker led the world’s chip market until it was hit hard by an accounting scandal in 2015. The company was fined a record US$60 million for inflating profits by US$1.9 billion in the course of seven years. Top executives of the company resigned while its shares plummeted after the scandal broke out.

During those years, Samsung has been spearheading the NAND flash memory chip sector. Its market share in the segment reached 34.9 percent in the second quarter in 2016, compared with Toshiba’s 20.4 percent, according to market research firm IHS Technology.

Western Digital and Micron of the US took up 15 percent and 11.4 percent, respectively, while that of SK hynix stood at 10.7 percent.

Some critics said, however, the anticipated combination of WD and Toshiba which have a combined market share of 35.4 percent, on the other hand, could pose a threat to Samsung.

“The capital injection from WD could help Toshiba narrow the technical gap with Samsung in the 3-D NAND flash memory technology and improve its production capacity,” said Doh Hyun-woo, an analyst from Mirae Asset Daewoo.

By Kim Young-won (wone0102@heraldcorp.com)