Samsung Electronics Co, the world's second-largest maker of semiconductors, scrapped a $5.85 billion offer to buy SanDisk Corp, saying losses at the US company may worsen as a glut forces chipmakers to cut prices.

Samsung withdrew its $26-a-share cash offer after failing to make "meaningful progress" over six months, Chief Executive Officer Lee-Yoon Woo said in a statement yesterday. Milpitas, California-based SanDisk has fallen 34 percent to $14.76 on the NASDAQ Stock Market in the past month after spurning the bid.

Lee walked away from what would have been the company's biggest acquisition and the chance to widen Samsung's lead over Toshiba Corp in the $15 billion market for memory chips that store songs and pictures in electronics. The move may increase pressure for SanDisk Chief Executive Officer Eli Harari to boost shareholder returns after the stock fell 56 percent this year. "There's no reason for Samsung to stick to their previous bid for SanDisk given the current environment," said Kim Hyung-Chan, a fund manager at Seoul-based KTB Asset Management Co, which has $3.3 billion in equities. "This decision won't deal much of a blow to Samsung."