The battle among the world's biggest microchip makers to stave off losses amid huge price falls gained pace today as Samsung said it may bid for the $3billion (£1.7billion) US giant SanDisk.

South Korea-based Samsung would widen its lead over Toshiba in the race to be top supplier of chips that store data for digital cameras and MP3 players.

A deal to take out SanDisk could allow firms to stem the production glut of so-called "flash" memory chips.

Chip prices have halved this year, hitting electronics goods prices on the High Street.

But the price fall has also hurt manufacturers badly.

SanDisk just reported its largest quarterly loss in almost seven years. Its shares have crashed 59% this year.

Samsung has hired JP Morgan Chase to help it plan a bid campaign, according to reports in Seoul today.

A deal for SanDisk would save Samsung up to $500million a year in royalties it pays to the US firm for using its flash-memory patented technology. That alone could make the deal worthwhile, said analysts.

SanDisk currently has a supply agreement to Samsung's arch-rival Toshiba which is also bound to be hit by a takeover by the Korean firm.

In February, Toshiba announced plans to spend $16billion with SanDisk to build two semiconductor plants.