By Miyoung Kim
SEOUL (Reuters) - SK hynix Semiconductor Inc, the world's No.2 computer memory chip maker, is still reviewing the books of Japan's Elpida Memory Inc for a possible bid, the South Korean firm said after reporting a worse-than-expected quarterly loss.
But SK hynix, considered one of three likely suitors for the bankrupt Japanese company in a second round of bids due late next week, would expect synergies with Elpida's technology for chips in smartphones and other mobile devices, Executive Vice President Kim Joon-ho said.
"Based on the results of due diligence, we'll decide whether to participate in the next round of bidding," Kim told analysts in an earnings conference call.
"We expect synergies in mobile (DRAM) technology from an Elpida deal and need to review their books for other benefits we could get from a potential deal," he said, adding that a deal could include the acquisition of Rexchip, Elpida's Taiwan-based joint venture.
Computer memory chipmakers are increasingly switching to lucrative mobile chip production to ride a boom in smartphones and tablets.
A combination with Elpida would give SK hynix a 38 percent share of the dynamic random access memory (DRAM) market for mobile devices, narrowing the gap with Samsung Electronics Co's 54 percent, according to Taurus Securities.
U.S.-based Micron Technology Corp and a private equity team comprising TPG Capital LG and China's Hony Capital are also in the race to take over Elpida, sources close to the talks have said.
The deadline for submitting second-round bids, originally set for Friday, has been extended by one week, Japanese media reported.
SK hynix on Thursday posted an operating loss of 260 billion won ($227.8 million) for the March quarter, hit by tumbling chip prices and a one-off bonus payment following its acquisition by SK Telecom, worse than an average forecast of a 155 billion won loss by Thomson Reuters I/B/E/S.
It was the firm's third straight quarterly loss and compared with a profit of 323 billion won a year ago and a loss of 167 billion won in the preceding quarter.
It expected DRAM chip prices to rebound from the second quarter, helped by reduced supply from troubled companies including Elpida.
"DRAM prices started rebounding due to increased demand from major customers, who are concerned about stable supply following a bankruptcy protection request (by Elpida), and the pace of the recovery is likely to accelerate as we go into the second half, when demand picks up further due to strong seasonality," an SK hynix executive said.
Contract prices of DRAM chips rose 8 percent in the first half of April, according to price tracker DRAMeXchange.
SK hynix said average selling prices of DRAM chips fell 10 percent in the first quarter, while NAND flash chip prices fell 16 percent, offsetting shipment increases of 9 percent in DRAM and 2 percent in NAND.
The firm plans to raise DRAM shipments by a mid single digit percentage rate in the second quarter and NAND shipments by 20 percent.
Shares of SK hynix, which competes with Samsung and Japan's Toshiba Corp, rose 1.3 percent by 0200 GMT, versus a 0.3 percent gain in the broader market. The stock has risen 23 percent so far this year on expectations of a turnaround, outpacing the broader market, which gained 7.5 percent.
(Reporting by Miyoung Kim; Editing by Richard Pullin and Edmund Klamann)