Japanese public broadcaster NHK, is reporting that Apple is considering a bid with its supplier Foxconn, for Toshiba’s semiconductor business. Toshiba is the world’s second-biggest flash memory chipmaker and last week, the company announced that its financial position is going from bad to worse.
Apple is considering investing at least several billion dollars to take a 20% stake or more, as part of a plan that would leave Toshiba with a partial holding, so that the business remains under joint US and Japanese control. This arrangement should allay Japanese government fears of a potential risk to national security with the transfer of sensitive technology to investors. It also emerged that Apple would like Foxconn to own a stake of around 30% of the chip business. When approached, neither Apple nor Taiwan’s Foxconn, made any comments concerning the reports.
Most of Apple’s iPhones are made at Foxconn’s extensive manufacturing base in China. An investment by Apple would be its first direct stake in a major global memory chipmaker, as it seeks to secure a stable supply of key components.
Samsung is the world’s biggest maker of flash memory chips, followed by Toshiba, SK Hynix and US-based Micron Technology.
Western Digital wants to be given exclusive negotiating rights in the bidding, as it has a joint venture contract with Toshiba. Western Digital also pointed out that the Japanese firm’s plans to sell its chip unit also violates the joint venture contract.
Toshiba has now limited the bidders for its chip unit to four companies: US chipmaker Broadcom, which has partnered with private equity firm Silver Lake Partners LP; SK Hynix; Western Digital; and Foxconn. The first round of bids, reportedly drew around 10 offers. It is not clear if Apple was one of the initial 10 bidders. Shares in Toshiba fell more than 5% last week, with Bloomberg reporting that the sale had been temporarily put on hold to address the Western Digital concerns, although this was denied by a Toshiba spokesman.
