"After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk," vice chairman Yoon Woo-Lee said in a letter to SanDisk's board.

Yoon, in the letter released by his firm, said SanDisk's third-quarter loss and "hurried renegotiation" of a relationship with Japan's Toshiba "point to a considerable increase in your risk profile and a material deterioration in value."

"As a result of these developments, we are no longer interested in acquiring SanDisk at 26 dollars a share," Yoon wrote.

A dispute over pricing became apparent last month, when Samsung expressed disappointment that SanDisk "clings to unrealistic expectations" about its market value.

The US firm in turn reportedly said it rejected the Korean firm's offer as "opportunistic" and an undervaluation of the company.

SanDisk bills itself as the world's largest supplier of flash memory cards, which are used in devices ranging from home computers and USB drives to mobile phones and digital cameras.

Had the deal gone ahead, Samsung would have been able to widen its lead over Toshiba in the 15 billion dollar flash memory chip market.

SanDisk owns a number of patents covering flash memory chips, and Samsung has paid some 352 million dollars annually in patent fees to the US company.

The deal would have been the largest-ever overseas acquisition by a South Korean firm.

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