Apple may be looking to bid on Toshiba's chip-making business
Apr 15 2017
Shares of Toshiba were partially buoyed this morning following a report that Apple is considering taking a major stake in the Japanese company's semiconductor business.
Apple is willing to spend billions to obtain a "substantial stake" in Toshiba's chip business, reports NHK. The company has reportedly put in a $27 billion bid on Toshiba's memory business, which is expected to be rejected.
Apple was not immediately available for comment. Nevertheless, if it can control the components used in the smartphone manufacturers, it would be a huge source of revenue for Apple.
"Japanese government officials have expressed concerns about Toshiba selling critical technologies to overseas buyers". In an attempt to raise money and pull itself out of the hole, Toshiba announced in January that it would be spinning off its highly profitable flash memory business into a separate entity, opening the segment to new investors.
In a move seen complicating the auction of the prized chip unit, Toshiba's partner Western Digital Corp warned the Japanese conglomerate in a letter this week that the sale process violated their joint venture contract.
Toshiba's solvency and fundraising ability are presently in doubt because of a $1.9 billion accounting scandal and a huge loss related to the purchase of a US nuclear plant business. Toshiba has been at odds with PricewaterhouseCoopers Aarata over accounting at Westinghouse, where the billions of dollars in losses stem from cost overruns on nuclear construction projects. This company is also one of the bidders for this chip business. The company also stated that it should be given exclusive negotiating rights, notes CNBC.
They are US chipmaker Broadcom Ltd, which has partnered with private equity firm Silver Lake Partners LP; South Korea's SK Hynix; Foxconn, the world's largest contract electronics maker, and Western Digital. The company, which invented NAND flash in the early 1980s, had been considering spinning off its semiconductor operations and selling a partial stake to Western Digital (WD) and others, as it tries to cope with a massive impairment loss in its USA nuclear power unit. Many companies have shown interest, but Toshiba has reportedly narrowed it down the bidders to just four - the chipmaker from America Broadcom, SK Hynix from South Korea, Western Digital, and Foxconn.
In exchange for the chip unit stake as collateral, Toshiba hopes to get about 300 billion yen in fresh loans and be able to draw down existing loan commitments worth 680 billion yen.