April 19, 2024

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[THE INVESTOR] Uncertainties are growing over SK hynix's bid for a 20 percent stake in Toshiba’s chip business, a crucial deal for the Korean chipmaker to gain traction on its lukewarm NAND business.

Until last week, the company seemed potent to win the bid considering its estimated bidding price reached 3 trillion won (US$2.62 billion), higher than the deal’s earlier market expectations. 

But according to news reports on Feb. 13, several bidders, including Bain Capital, Micron Technology and Hon Hai Group, lined up for the lucrative stake, with their bidding prices ranging from 200 billion yen (US$1.75 billion) to 400 billion yen.

Amid the heated competition, Toshiba reportedly prefers investment funds fearing possible tech leaks to rivals. Due to the same concerns, the company is also said to be considering selling the stake to several investors, not a single bidder.

“Even the entire 20 percent would allow limited access to Toshiba’s chip technology,” said Lee Seung-woo, an analyst at IBK Investment & Securities, referring to the possible stake sale to multiple bidders.

“Winning the bid is still considered a boon for SK hynix. But now the possibility seems lower than before.”

Toshiba, the world’s No. 2 NAND chipmaker, is selling the stake to offset almost 700 billion yen financial losses in its nuclear business in the US. Rivals, especially SK hynix, have long eyed the firm’s NAND technology amid soaring demand for long-term data storage for cloud, Internet of Things and big data services.

SK hynix, which still depends more than 70 percent of its sales on DRAM chips used in short-term storage in smartphones and PCs, has been losing money on its NAND business due to the huge technology gap with leading players like Samsung Electronics, the No. 1.

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