The economic upheaval around the globe just torpedoed another deal. South Korean electronics giant Samsung said it will abandon its effort to acquire computer memory and consumer electronics manufacturer SanDisk, noting a particularly shaky environment for SanDisk's various markets it sells into.

Samsung CEO Lee Yoon-woo told CNBC that "Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung." Yowza. Nothing like going from one extreme to the other. But he's right - SanDisk's outlook has gone down the toilet. Along with it went Samsung's $5.9 billion takeover offer.

Yoon-woo went on to say that his company is no longer interested in buying SanDisk for $26 per share. Don't think Samsung won't be back at some point if SanDisk's share price trails downward, though. SanDisk already told Samsung to get lost when the bid was announced, but Samsung - to me - is still very interested in getting its hands on SanDisk. When the initial bid was announced, SanDisk said that Samsung's bid failed to recognise the intrinsic value of SanDisk's intellectual property. What intrinsic value? Commodity memory and consumer electronics products?

UST (NYSE: UST) is recently trading at $62.80 in pre-open trading, above its close of $54. Altria Group (NYSE: MO) is close to acquiring UST in a deal worth more than $10 billion, the New York Times reported. UST September option implied volatility is at 39; October is at 35 above its 26-week average of 27 according to Track Data, suggesting larger price movement.

ScanDisk (NASDAQ: SNDK) is recently trading at $17.49 in pre-open trading, above its close of $13.46. Samsung Electronics said it is looking at various ways of tying up with SNDK. SNDK, a supplier of flash storage cards says "SNDK periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities. We evaluate all of these opportunities, but maintain a policy of not commenting on market rumors or speculation," SNDK September option implied volatility of 64 is above its 26-week average of 59 according to Track Data, suggesting larger price movements.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Shares in chip-maker Micron Technology, Inc. (NYSE: MU) are trading higher on rumors that Samsung Electronics may buy part of their business. The South Korean Electronics giant is denying the report. Micron Technology of the U.S. is the world's leading producer of CMOS image-sensing chips. Micron three years ago invested heavily in image-sensor chips as a hedge against fluctuations in demand and prices of memory chips. Business has been very week as prices for these chips have plummeted. That being said, chip-makers have started cutting production to create better pricing.

Morgan Stanley (NYSE: MS) analyst Atif Malik said he understood why investors are getting excited about a potential price rebound for Micron shares as chip makers are starting to cut production in some less-profitable types of chips.

While Samsung denies the rumors, I wouldn't be surprised if a deal gets done. Why? Because in October Samsung bought Israeli non-memory chip developer TransChip Inc. to help strengthen its research and development capability in the CMOS chip business.

With Micron shares down more than 35% from their 52 week high, Samsung would be able to establish a real foothold in this business for cheap.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/6/07.

Samsung Electronics (LSE: SMSN) is a big name in the consumer electronics field these days. Personally, I use a Samsung cellphone, color laser printer, LCD computer monitor and more. In many cases, Samsung products have entered my home due to good pricing, stylish quality and excellent craftsmanship. Those amenities are apparently not enough to keep large profits flowing into South Korea's largest company (by revenue).

Samsung continues to be the world's largest seller of flat-panel screens (computer monitors and flat-panel televisions) and is a staple in the cellphone world, serving virtually every global market that exists along with almost every wireless carrier in established wireless markets. But, even with that, the company's share price is down 10% this year, and the company is expected to report its fourth straight quarter of declining profit. What's happened?

Margins have plummeted in many areas where it leads, such as flat-panel technology and computer components (Samsung makes more computer RAM memory than any other company). The company has been slow to create market-leading awareness in higher-margin businesses (like color laser printers), and its recent quarterly results show this. Are customers increasingly being more satisfied with Samsung's products, thereby waiting on upgrading and considering price as the main factor when they do? Perhaps.

Consumers in emerging markets have these same concerns as well (especially price), so where are all these new high-margin product segments at, then? That's the magic 8-ball question. I'll say this: I've owned a high-end Samsung cellphone since January of this year and don't plan on upgrading it for a long time. Why? Well, it works great and has every conceivable feature I could ever need in a cellphone. Samsung doesn't want to hear that, though. In other words, it may be making many products so good that customers have a stagnating need to buy the latest and greatest.