As Apple is planning to manufacture most of its chips in-house, it is now being said to be considering a massive investment of billions of dollars into Toshiba’s flash memory (chip) business. The Japanese giant has put up its business for sale to score capital to overcome the write-down in its nuclear equipment operations in the U.S. It amounts to a hefty 716.6 billion yen ($6.56 billion) and has dragged down the company towards bankruptcy.
According to reports from Reuters (and Bloomberg), who cite Japan’s national broadcaster NHK, Apple is said to be eyeing as much as 20 percent stake in the chip business. This, the Cupertino giant believes, will not only curb Toshiba’s desperate capital needs but it will also help keep a majority of the company’s operations under U.S and Japanese control. This deal could also result in pleasing the governments of both the nations while satisfying each other’s needs. Thus, it could be a win-win situation for both, said NHK.
Earlier, we had reported that Toshiba had bagged offers for purchasing the chip business from several suitors — where some are quite eager to get on the high horse and pick up a majority stake. They’re even willing to offer massive sums of capital, as high as nearly $20 billion, to buy out the said business. The bidders include a diverse range of competing chipmakers, technology giants, and PE (private equity) firms.
The frontrunners for the chip business included — American chipmaker Broadcom, who has teamed up with PE firm Silver Lake to offer $17.9 billion whereas Taiwan’s HonHai has reportedly placed a bid of more than 2 trillion yen ($18 billion), which is quite high as compared to the suggested price tag. Other potential suitors include biggies such as Google, Amazon, Micron, and TSM (Taiwan Semiconductor) among others.
But, the sale of the flash memory business currently seems to be on a hold as Toshiba’s joint-venture partner Western Digital (WD). The Japanese giant has cancelled its meetings and discussion w.r.t the sale due to red flags raised by their long-time industry partner. While Toshiba has been narrowing down buyers, WD jumped in and said that a sale would violate their contract. It further advised, as well as warned Toshiba about its potential suitors who’re offering bloated prices for the business. It said they should sit together and negotiate exclusively before going for a possible sale.
For those unaware, Toshiba is currently in this situation because of a 2015 profit-padding scandal that led to record losses and made the company slash its staff. It is now being followed by the sale of its business, called for by Toshiba’s infuriated, investors to cover up for the losses due to the nuclear project. The company is currently exactly profitable and its losses are only on the rise and have now peaked to a massive $9 billion.
As for the company’s chip business, Toshiba is recognized as the second largest chip supplier in the world, just behind South Korean giant Samsung. This proves the worth of the former’s chip business, which brought in about a quarter of its 5.67 trillion yen (approx $51 billion) in revenue last fiscal year. Toshiba’s flash memory business is leading the shift away from hard disks and is now used in most computers, smartphones, and other connected devices. The said business, however, is now said to be plagued with a slowdown.
The latter, on the other hand, was struck by multiple ordeals in the previous year, especially the Galaxy Note 7 flagship burning a large hole in its pocket, but the semiconductor business has helped Samsung to stay afloat. The company is expeceting to again post record profits in the current quarter, but analysts believe growth will slow down later this year.