Samsung, the South Korean electronics titan, is mulling a takeover of America’s SanDisk that could spark an international bidding war for the Silicon Valley chip maker and would dramatically shake-up the $15 billion global memory market.

A potential tussle over SanDisk could see Samsung vying for control of the company with suitors in the US and Japan, according to analysts.

Reports earlier this year suggested that California’s Seagate was sizing up its domestic rival for a possible takeover.

Any bid battle would be fought amid deepening misery in the industry: the global digital revolution has been excellent for sales but tough on margins. Despite the rapidly increasing use of flash memory cards in digital cameras, music players and laptop PCs, prices have been under constant pressure and continue to slide.

Prices of memory chips have halved this year, forcing SanDisk, as the world’s largest producer of memory cards, to announce its first quarterly loss since the technology bubble burst seven years ago.

A takeover of SanDisk, which might cost Samsung more than $3 billion (£1.7 billion), would deal a blow to Toshiba, its closest rival in memory chips. Earlier this year, Toshiba and SanDisk launched plans to collaborate on a $16 billion project to build two plants.

The project would, at a stroke, double Toshiba’s production capacity and market speculation now suggests that any threat to those plans might draw the Japanese giant into launching its own bid for SanDisk.

The risk, said brokers recommending clients to sell Toshiba shares, was that under Samsung control, SanDisk would immediately stop the flow of capital into the new factories, leaving Toshiba to foot the bill itself or scale back its plans.

From Samsung’s point of view, a takeover of SanDisk makes sense. The company is thought to control a 42.3 per cent global market share in the flash memory market — against Toshiba’s 27.5 per cent and the 13.4 per cent share controlled by the world's number three, Hynix Semiconductor.

Samsung already buys SanDisk technology: each year it pays around $450 million in royalties for the use of patents held by Samsung. The royalty fee savings alone could justify a bid, said Chung Chang Won of Lehman Brothers.

A statement from SanDisk acknowledged that the company “periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities.”

Shares in SanDisk traded in Frankfurt leapt 15 per cent after Samsung filed a statement with the Seoul regulators, saying that a takeover bid for Sandisk was “an option”.

Shares in Toshiba, which were tumbling as part of a market rout, sank more than 4 per cent to a three-year low.

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