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Foxconn, Apple, big biz circle Toshiba's memory biz cash cow – rumors

So far, the highest bid is $27bn, it is claimed

By Chris Mellor, 18 Apr 2017

Three new characters are starring in Toshiba's saga to sell off its memory business: they are Foxconn, Apple, and a fund backed by Japan's government.

Japanese giant Toshiba is trying to flog its NAND-chips-to-SSDs memory biz in whole or in part because it's making galactic-scale losses on its Chapter 11-filed US nuclear power station business, Westinghouse Electric, and needs cash to recapitalize itself and so prevent a looming financial catastrophe.

Broadcom put in the highest first round bid of ¥2.5tn ($23bn). And while the Japanese government is worried about jobs and technology flowing to China and Taiwan, Taiwanese goliath Hon Hai Precision Industries – aka Foxconn – is believed to have put in a bid of ¥2tn ($18.5bn). It has plenty of manufacturing capacity in mainland China and makes Apple's iPhones, which use some Toshiba flash chips.

Others have said Foxconn put in a leading ¥3tn ($27bn) bid, with Western Digital and SK Hynix each bidding ¥1tn ($9bn). OK so far?

Toshiba Flash foundry partner Western Digital says the leading bidders are overvaluing the business – and, anyway, the joint venture terms it has with Toshiba say it has to agree to any sale, and so it wants exclusive talks.

Round two of the bidding with four bidders – Broadcom, Foxconn, SK Hynix and Western Digital – are set to take place in the next few weeks, we've heard.

Various news orgs, such as IBT, reported rumors and speculation over Easter that Apple could take a partial stake in Tosh's memory business, with Foxconn holding another stake so that it wouldn't control the business.

Foxconn was also said to be talking to Japan's SoftBank to increase the positivity of its perception in Japan and obtain credit from Japanese banks. Both things would lessen the Japanese administration's fears about Foxconn getting hold of Japan's prized economic assets.

As part of the Japanese government and financial establishment's anti-China/Taiwan meddling, Toshiyuki Shiga, the chairman of Innovation Network Corp of Japan (INCJ) – a partnership between the Japanese government and 19 major corporations – has said they are considering taking part in the second round of bids as a minority party with some other bidder.

There's an opportunity for Western Digital to maybe use INCJ money to bulk up its own bid, and also use the joint venture contract's terms and lawyers to keep the other bidders out. ®

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