Toshiba, SanDisk’s partner in making memory chips, is more likely to sign off on a potential takeover of SanDisk by hard drive maker Western Digital than by rival memory chip maker Micron, analysts said.
Micron Technology and Western Digital are in talks with SanDisk about a possible acquisition, Bloomberg reported on Tuesday.
The report came after months of intense speculation about imminent consolidation in the memory chip industry as a supply glut and cheaper products from China continue to drive down prices.
SanDisk will require Toshiba’s approval to consummate a deal with either party. SanDisk uses Toshiba’s foundries to make its chips and the two companies have an important intellectual property-sharing joint venture.
If Micron, which has its own foundries, buys SanDisk, Toshiba is likely to lose a lot of business. Moreover, Micron has a growing presence in the NAND-flash memory chips market and a tie up with SanDisk will immensely increase competition for the Japanese tech leader.
NAND-flash memory chips power solid-state drives, which are faster and more reliable than traditional hard drives, Western Digital’ mainstay. SSDs are used in cloud computing, data centres, smartphones and laptops.
“From Micron’s perspective … you could take out two competitors at once,” Cowen and Company analyst Timothy Arcuri said.
“If you can extricate SanDisk from the Toshiba JV, then you’ve taken Toshiba out of the NAND business and you’ve taken out SanDisk as well … this would really catapult you to number 2. status behind Samsung.”
Micron and Western Digital declined to comment. Toshiba and SanDisk did not immediately respond to requests seeking comment.