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Report: Toshiba drops bid for Elpida

Toshiba drops bid for bankrupt Japanese chipmaker, leaving only foreign companies in the running, report says.
Written by Jamie Yap, Contributor on

Toshiba is reportedly withdrawing its bid for bankrupt Japanese chipmaker Elpida, after talks of joint bid with potential partners-including South Korea's SK Hynix--stalled.

Citing unidentified sources close to the talks, Reuters reported Tuesday that Toshiba decided to exit the second round of bidding scheduled this Friday after the failed discussions.

Reuters, citing a source close to SK Hynix, said although the company had been approached by Toshiba for a joint bid, the initial talks did not lead to serious negotiations.

Toshiba would neither confirm nor deny whether it was withdrawing from the bidding, while SK Hynix declined to confirm if it was bidding on its own, according to the report.

With Toshiba out of the race to take over Elpida, it "cleared the field" for the foreign companies which remain--SK Hynix, U.S. semiconductor manufacturer Micron Technology, and private equity firms TPG Capital from the U.S. and Hony Capital from China, sources told Reuters.

Reuters noted that Toshiba's withdrawal will be a relief to its investors, who questioned the bid for Elpida, the world's number 3 maker of dynamic random access memory (DRAM) chips, since Toshiba itself sold its U.S. DRAM facilities to Micron more than a decade ago in 2001.

In the article, Makoto Kikuchi, CEO of Myojo Asset Management, noted that DRAM chips were mostly used in PCs which have seen shipments and sales plunge amid mobile device proliferation. "it's better for Toshiba to focus on its thriving NAND flash memory," he said. 

NAND chips are heavily used in smartphones and tablets.

Elpida filed for bankruptcy in February after five straight quarters of losses and could not sustain its debts of 448 billion yen (US$5.5 billion). It later delisted from the Tokyo Stock Exchange in March.

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