South Korean chipmaker SK hynix is on track to becoming a global NAND flash memory powerhouse, as it is part of an international consortium that is on course to take over Japanese tech giant Toshiba’s memory chip business unit.

Toshiba’s memory chip unit is the second-largest NAND flash memory manufacturer in the world after Korean tech giant Samsung Electronics, while the chip manufacturing unit of SK Group comes fifth in the sector.

The Japanese tech firm, which has been suffering a financial crunch, recently approved plans to sell its memory chip unit Toshiba Memory Corp. to a consortium led by US-based Bain Capital, Apple, Dell, Japan’s Hoya and SK hynix for around 2.4 trillion yen ($21 billion).

Although SK hynix and other members of the consortium are keeping mum on the details of the Toshiba deal, most market watchers predict they will all reap benefits, whether it is securing stable NAND supplies or potential technical cooperation.

“If final negotiations are settled in SK hynix’s favor, the Toshiba deal will help catapult the Korean chipmaker to the next level in the NAND sector,” said an industry source who wished to remain anonymous as the deal has not been closed.

Data for the second quarter of this year compiled by market research firm DRAMeXchange showed that the combined market share of Toshiba’s NAND unit and SK hynix will account for 27.4 percent of the entire NAND market.

According to IHS Markit, Toshiba was the world’s second-largest producer of NAND flash memory chips in 2016, accounting for 16.1 percent of the market, behind Samsung Electronics which commands a 38.3 percent market share.

SK hynix ranked fifth, with a 10.6 percent share of the global NAND market, behind US-based semiconductor makers Western Digital and Micron Technology.

The Korean chipmaker, the world’s second-largest manufacturer of DRAM, has reportedly invested around 3 trillion won ($2.6 billion) toward the Toshiba acquisition.

The scale of the benefits SK will reap from its inclusion in the consortium -- including access to Toshiba’s core NAND manufacturing technologies -- will depend on the deal’s finalized terms and conditions.

Some Japanese news reports have noted that SK’s investment will take the form of a simple loan and will not translate into convertible bonds. Convertible bonds can be converted into stocks after a certain period of time, but a loan only receives interest, not equities.

SK hynix declined to comment on the details of the Toshiba acquisition, citing nondisclosure terms.

By Sohn Ji-young (jys@heraldcorp.com)