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The Korea Herald
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THE INVESTOR
March 28, 2024

Mobile & Internet

SK hynix among potent bidders for Toshiba stake: IHS

  • PUBLISHED :April 05, 2017 - 18:28
  • UPDATED :April 06, 2017 - 11:26
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[THE INVESTOR] Top analysts on April 5 picked SK hynix as one of the potent bidders to acquire Toshiba’s memory chip business unit amid the heated bidding war for the lucrative stake.

“I think it would be one of the existing chip suppliers like SK hynix, Micron, or Western Digital (who have a better chance to win the bid) and each one has its own pros and cons as to why they would make the most sense,” said Mike Howard, senior director for DRAM & memory from IHS Markit at a press meeting in Seoul. 




Related:
Micron, SK hynix, WD in race for Toshiba stake
SK hynix teams up with Japanese investors for Toshiba stake


Among the top bidders, the analyst added, SK hynix has an advantage from a financial perspective, considering its abundant cash flow.

The Korean chipmaker is one of the several bidders that have submitted bids to acquire at least 50 percent or the entire stake in Toshiba’s NAND chip business. The race is heating up with the participation of big name companies such as Hon Hai and Apple, raising the deal price to some 2 trillion yen (US$18 billion).

SK hynix’s market capitalization has reached US$32.6 billion as of April 5, which compared to US$31.3 billion and US$23.7 billion for Micron and Western Digital, respectively.

Thanks to its upbeat chip sales, the company posted US$4.5 billion in revenue in the fourth quarter last year, becoming the world’s third-largest semiconductor firm by revenue after Intel and Samsung Electronics.

The IHS analyst, however, pointed out that SK hynix’s limited experience in mergers and acquisitions will be one of the biggest challenges facing the chipmaker in the Toshiba bidding.

He added Micron and Western Digital, both from the US, also have high chances to win the bid considering their close ties with Toshiba over the past years even though their balance sheets are not as strong as that of SK hynix.

Having access to Toshiba’s chip manufacturing technology is expected to benefit SK hynix which is still struggling to secure a firm footing in the NAND chip segment despite its strong presence in the DRAM market.

The world’s second-largest DRAM maker is ranked fifth in the NAND sector after Samsung, Toshiba, Western Digital and Micron.

In the meantime, the last thing almost everyone within the chip industry, except for those in China, wants to see is Chinese firms like Hon Hai and TSMC acquiring the NAND business from Toshiba, according to Walter Coon, director for NAND flash at IHS.

“It gets a little scary when you think of a large amount of Chinese money sort of blowing up the market,” Coon said of the Chinese bidders in the Toshiba race.

He also downplayed the possibility that US tech firms like Apple, Google and Amazon could win the race, saying they wouldn’t seek a drastic change in their current strategy for component procurement.

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

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