Samsung Electronics' proposal to acquire US-based SanDisk (NASDAQ: SNDK - News) heralds a change in the South Korean company's growth strategy, increasing expectations that the technology group may seek more cross-border acquisitions in an effort to maintain its market lead in the memory chip market.

Yesterday, the South Korean chipmaker said that it planned to continue talking to SanDisk after it went public with a $5.8bn unsolicited bid.

"We made a full and fair offer and we felt the need to let the shareholders [of SanDisk] know about it," Samsung said. "The talks are likely to get protracted."

Samsung declined to say whether it would pursue a hostile strategy and start direct talks with shareholders. But one thing is clear: Samsung's attitude towards cross-border acquisitions is changing.

The South Korean chipmaker has traditionally been very conservative, favouring organic growth and greenfield development to expand its global presence, after it was burnt by bad overseas investments in the 1990s.

In 1994, Samsung acquired AST Research, the US computer-maker. But after mass defections of local researchers and large losses, the Korean group was forced to close the company. After that it focused on organic growth and has become a global leader in the production of chips, flat screens and other digital devices through aggressive research spending and technological innovation.

Then last year the group appeared to change its strategy. Faced with increasing pressure to find new sources of growth as its core businesses matured, Samsung bought an Israeli non-memory-chip developer in a small deal.

Buying SanDisk, however, would be Samsung's first major overseas acquisition in more than a decade. But the growth story has started to fizzle in recent years with deteriorating margins in its core businesses.

"One of the major concerns of investors is a lack of Samsung's growth drivers. It has been reliant on only organic growth, with no major M&As," said Kim Jee-soo, an analyst at Goodmorning Shinhan Securities.

"Since 2004, its earnings have been on a downward trend with growth momentum slowing," says Peter Yu at BNP Paribas. "Samsung tries to do everything on its own and its cash reserves keep accumulating. Is that good for shareholders?"

If a deal goes ahead, it would cement Samsung's leadership in the flash memory market. According to market researcher iSuppli, Samsung controls 42.3 per cent of the Nand flash memory market, followed by Toshiba on 27.5 per cent and Hynix with 13.4 per cent.

Analysts say profits at Samsung's flash memory business are likely to have been hit by tumbling chip prices due to an oversupply. And they predict that a price recovery is not likely any time soon, citing weak demand and a high inventory.

A deal with SanDisk would also help reduce Samsung's royalty payment to the US group. Samsung is estimated to pay SanDisk about Won400bn ($361m) a year in licensing fees.

Analysts say it is time for Samsung to move towards more aggressive expansion. The company had Won6,380bn in cash and cash equivalents at the end of June, and it has spent about Won1,000bn annually to buy back its own shares.

The question is whether any rivals, such as Toshiba, enter the battle for SanDisk.