UPDATE 4-Samsung drops $5.9 bln SanDisk bid in weak markets

(Adds U.S. SanDisk shares, analyst comment)

By Rhee So-eui and Marie-France Han

SEOUL, Oct 22 (Reuters) - Samsung Electronics Co Ltd, the world's top memory chip maker, withdrew a $5.9 billion unsolicited bid for flash memory card maker SanDisk, citing the U.S. company's deepening losses and uncertain outlook.

The news sent SanDisk shares plunging nearly 30 percent on Wednesday, its biggest one-day slide since January 2001.

Makers of memory chips are bracing for another round of heavy quarterly losses as a downturn in the industry shows no signs of letting up.

Markets had been doubtful of a deal between Samsung (005930.KS) and SanDisk (SNDK.O), given that the spread between Samsung's offer price and SanDisk's trading price was 80 percent, according to Reuters data.

"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," Samsung CEO Lee Yoon-woo wrote to SanDisk management in a letter disclosed on Wednesday.

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

SanDisk shares fell $4.35 to $10.41 on Nasdaq, where it was one of the most active issues, after hitting a session low of $10.13. On Sept 4, the day before reports of Samsung's interest appeared, SanDisk shares closed at $13.46.