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Samsung set to buy SanDisk?

Checking out 'various opportunities'

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The flash memory market is abuzz as Korean news sources, along with Reuters and Bloomberg, are reporting that Samsung Electronics is thinking about buying SanDisk.

A Samsung spokesperson, James Chung, said: "We are considering various opportunities regarding SanDisk but nothing has been decided.''

SanDisk is uninformative, a spokesperson aying: "SanDisk periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities. We evaluate all of these opportunities, but maintain a policy of not commenting on market rumors or speculation." Mud could be clearer.

Korea-based Samsung is the world's largest NAND Flash memory maker and it pays KRW400bn ($351m) each year in royalties to SanDisk. The Asus Eee PC and the Apple iPhone, for example, use Samsung flash chips.

SanDisk owns Flash memory patents and makes Flash-based MP3 players, memory cards and solid-state drives (SSDs). It posted poor results at the end of July, with an unexpected Q2 loss of $68m compared to a $28m profit in the year-ago quarter.

There is an over-supply in the NAND Flash market with a product glut causing price falls. The firm has slowed its production growth plans. SanDisk boss Eli Hariri has said that current SSD notebook use is limited by Windows' inability to use SSDs sensibly. He also reckons that ten or so mega-fabs could be needed in the next few years to satisfy potential SSD demand as higher-capacity, multi-level cell (MLC) flash drives prices down, and as flash controllers drive write endurance cycles up.

SanDisk partners Toshiba in SAN production facilities and this would mean that Samsung would gain access to more NAND Flash output as well as saving the royalty money it pays SanDisk, if an acquisition attempt is made and succeeds.

Last month, there was speculation that Seagate might buy SanDisk to help its planned entry into the SSD supply market next year.

SanDisk is denying any knowledge of Samsung's acquisitive thoughts, suggesting that any takeover would be aggressive unless oiled by large amounts of cash.

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