April 27, 2024

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[THE INVESTOR] SK hynix is seeking to secure a 20 percent stake in its Japanese rival Toshiba’s semiconductor business in a renewed push to beef up NAND chip business.

According to industry sources on Feb. 7, the chipmaker recently offered its bid to purchase the stake for about 3 trillion won (US$2.62 billion). 

Since being acquired by SK Group, the nation’s third-largest conglomerate, in 2012, SK hynix has poured resources into DRAM chips that are used for short-term storage in smartphones and PCs. Currently, DRAM business makes up almost 70 percent of its sales.

However, the chipmaker has struggled to expand its presence in NAND chips -- which have seen soaring demand recently, as they are increasingly being adopted for long-term storage of Internet of Things, cloud and big data services.

Experts say the possible tie-up between SK hynix and Toshiba could be a win-win for both firms.

SK hynix will strengthen its future competitiveness by teaming up with one of the top NAND manufacturers, while Toshiba, hit hard by huge financial losses in its nuclear power business, will secure cash to offset the losses.

SK Hynix, especially, is expected to benefit from Toshiba’s advanced controller technology, taking on Samsung Electronics, the market leader.

The chipmaker has also secured enough cash. The company logged 3.27 trillion won in operating profit last year. As of the fourth quarter last year, its cash reserves reached 4.13 trillion won. In the first quarter this year, its operating profit is estimated to hit 2 trillion won.

“Chinese chipmakers are pouring resources into NAND chips. If they acquire stakes in Toshiba, that would pose a direct threat to SK hynix,” said Kim Kyung-min, analyst at Daishin Securities.

“K hynix is highly likely to win the bid considering its cash reserves and willingness for mergers and acquisitions.”

On Jan. 24, the chipmaker also acquired LG Siltron, a wafer manufacturing unit of LG Corp., for 620 billion won.

Cash-strapped Toshiba is considering selling off an additional stake in its NAND business unit to Western Digital, a joint venture partner in its production plant in Japan, and other NAND manufacturers.

By Lee Ji-yoon (jylee@heraldcorp.com)