SK Hynix Consortium Wins Bid for Toshiba's Memory Chip Business

Kelly Park, Sept. 21, 2017, 9:21 a.m.

A consortium of SK Hynix and Bain Capital Private Equity have won the bid to buy Toshiba's memory chip business. Japan's largest chipmaker and owner of core NAND flash technology is being taken over by a rival that entered the industry 20 years later.

Japanese media reported Wednesday that Toshiba in a board meeting decided to sell its memory business to the consortium led by Bain and involving SK Hynix, Apple, Dell and other Japanese and U.S. IT companies for 2.4 trillion yen or around US$18 billion.

The consortium will hold a 49.9 percent stake and Toshiba and other Japanese businesses the rest. SK Hynix participated by lending Bain Capital around 300 billion yen, which results in a 15 percent stake. Apple plans to invest $3 billion.

SK Hynix ranks fifth in terms of global NAND market share with 10.6 percent but will now have a stake in the second-ranked player whose share is 16.1 percent.

Toshiba was the first to commercialize NAND flash chips back in 1987 and holds numerous patents in the field. SK Hynix shares soared to a record W87,000 on Wednesday when news of the acquisition broke (US$1=W1,129).

SK Hynix ranked second after Samsung in the global DRAM market in the second quarter of this year with a 26.8 percent share. Samsung led the world with 45.1 percent. But in the NAND flash market, SK lagged farther behind after Samsung, Toshiba, Western Digital and Micron.

Lee Se-cheol at NH Investment and Securities said, "The global NAND flash market will be realigned to form a rivalry between Samsung versus Toshiba/SK Hynix over the long term."

But there are some concerns that SK may not end up reaping huge benefits since its participation is through loans rather than equity.

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