Samsung-SanDisk deal negative for Toshiba?

EL SEGUNDO, USA & BANGALORE, INDIA: Last week, there have been rumors of a possibility of Samsung acquiring SanDisk. While it is still a possibility, it however, leads to several interesting questions!

Should this deal happen, what will be the possible implications for the memory market? Will this also lead to a possible easing off on the pricing pressures on the memory supply chain? And well, what happens to the Toshiba-SanDisk alliance?

Just a couple of weeks back, iSuppli, had highlighted how Micron had managed to buck the weak NAND market conditions, and was closing the gap with Hynix in Q2, and that NAND recovery was likely only by H2-2009.

I managed to catch up again Nam Hyung Kim, Director & Chief Analyst, iSuppli Corp., and quizzed him on the possible buyout of SanDisk by Samsung.

On the possibility of Samsung's takeover of SanDisk, he says: "Samsung at least said that they consider it. Thus, it is a possible deal. But who knows!"

Nam Hyung Kim is more forthright on the implications for the memory market, should this deal happen, and I tend to agree with him.

The chief analyst quips: "The NAND flash market is still premature and there are too many players in flash cards, USB Flash drives, SSD, etc. The industry consolidation should be inevitable in future."

So, will this possible buyout at least ease some pricing pressures on memory supply chain? "I don’t expect this deal to impact the prices. Prices will depend on suppliers’ capacity plans. In the memory industry, the consolidation has never impacted the prices in a long run. (maybe, just a short-term impact). As you know, Micron acquired Lexar a few years ago, but no impact," he adds.

Is there any possibility of SanDisk delaying its production ramps and investments at two of its fabs? And, what will happen should it do so?

Nam says: "SanDisk has already said that they would delay its investment and capacity plan given difficult market condition. This is a positive sign to the market as we expect slower supply growth than expected in future. However, in a long run, consolidation won’t impact the market up and down."

Lastly, what happens to the SanDisk-Toshiba alliance, should the Samsung buyout of SanDisk does happen?

Nam adds: "It is negative to Toshiba. The company not only loses its technology partner, but also loses its investment partner. It should be burden for Toshiba to keep investing themselves to grow its business."