Toshiba’s possible spin-off of its chip business will narrow the technology and market share gap with its bigger rival Samsung Electronics, Mirae Asset Daewoo Securities predicted Friday.

Toshiba, which is struggling from massive losses in its nuclear business, is mulling spinning off its lucrative NAND flash unit and selling the stake to its bigger chip rival Western Digital, according to news reports. 

“If the spin-off is confirmed, the financial condition of Toshiba’s chip unit will be improved. This will allow the firm to secure more capacity in development and thus narrow the technology gap with Samsung,” said Do Hyun-woo, an analyst at Mirae Asset Daewoo Securities.

Do explained Toshiba once had the best capacity in 2D NAND but lost the leadership in 3D NAND due to the belated investment as the group financially struggled.

The Japanese chip maker is currently mass-producing 48-layer 3D NAND using U-shaped structure and Bit-Cost Scalable technology. It plans to mass produce 64-layer 3D NAND in the first half of this year.

“If Toshiba is merged with Western Digital, their combined shares will exceed that of Samsung Electronics,” Doh said.

Samsung, which is currently dominating the 3D NAND flash market, is the leading player in the global NAND flash market with a 36.6 percent share. Toshiba and the US chip maker Western Digital have 19.8 percent and 17.1 percent each, according to search firm DRAMeXchange.

Apart from Western Digital, other companies like SK hynix may also show an interest in investment, Do predicted.

“Although SK hynix and Toshiba had legal disputes in the past, they have been traditionally partners in jointly developing technologies -- such as Nanoimprint Lithography. With the possible investment, SK hynix’ NAND flash competitiveness will also be improved due to the synergy effect,” the analyst said.

SK hynix is the fifth largest in the global NAND flash market following Samsung Electronics, Toshiba, Western Digital and Micron Technology.  

By Shin Ji-hye (shinjh@heraldcorp.com)