Toshiba drops out of bidding for Elpida: sources
By Maki Shiraki
TOKYO (Reuters) - Toshiba Corp is no longer bidding for bankrupt Japanese chip maker Elpida Memory, sources close to the talks said, leaving a handful of foreign firms including SK Hynix and Micron Technology in the race to take over the company.
Toshiba has decided not to join the second round of bidding set for Friday after talks stalled on a joint bid with potential partners, including South Korea's SK Hynix, the sources told Reuters on Tuesday.
Toshiba's withdrawal was a relief to its investors, who questioned the merits of a bid for Elpida, the world's No.3 maker of dynamic random access memory (DRAM) chips, by a company that pulled out of DRAM chip-making a decade ago by selling its U.S. DRAM facilities to Micron.
It also clears the field for those still planning to take part in Friday's bidding, which include SK Hynix, Micron and private equity firms TPG Capital LP and Hony Capital, according to the sources, who declined to be identified due to the sensitivity of the matter.
"It's better for Toshiba to focus on its thriving NAND flash memory," said Makoto Kikuchi, chief executive officer at Myojo Asset Management.
Toshiba's NAND memory chips are used heavily in smart phones and tablets such as Apple Inc's iPad and iPhone, while DRAM chips, the bulk of which are used in PCs, have been hit by falling prices as consumers switch to mobile devices.
"For winners in the DRAM industry, it makes sense to form a tie-up in order to cut costs and improve efficiency," Kikuchi said.
Toshiba shares rose on Tuesday, trading up 0.6 percent at 329 yen, while Tokyo's benchmark Nikkei average slumped more than 1 percent to a two-week low. Continued...