U.S.-based Micron Technology (MU.O) and SK hynix were among a handful of chipmakers and funds that have shown interest in Elpida, which filed for bankruptcy protection in late February amid 448 billion yen ($5.6 billion) in liabilities.

The South Korean chipmaker decided to pull out of the bidding as the deal would not "strategically benefit" the company, SK Group's Chairman Chey Tae-won told reporters after a board meeting. He did not give details.

Shares in SK hynix jumped as much as 6.1 percent to 28,900 won, the highest since April 19.

TPG Capital LP TPG.UL and China's Hony Capital intended to place a joint bid for Elpida in the final round of an auction, which closed on Friday, sources told Reuters previously.

Elpida's Chief Executive Yukio Sakamoto and lawyer Nobuaki Kobayashi have been appointed by the Tokyo district court to oversee the auction.

A group of Elpida bondholders said last month they may thwart the auction if trustees agree to a reported selling price of 150 billion yen.

Elpida is the world's No.3 maker of dynamic random access memory (DRAM) chips, trailing Samsung Electronics (005930.KS) and SK hynix with a market share of around 12 percent.

The company's failure was the largest for a Japanese manufacturer ever. ($1 = 80.3800 Japanese yen)

(Writing by Junko Fujita; Editing by Ryan Woo)

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