SAN FRANCISCO—Apple and Amazon will pony up to pay a portion of contract manufacturer Foxconn's bid to acquire Toshiba's semiconductor business as the consumer electronics powerhouses move to secure a steady supply of NAND flash memory, Foxconn's cheif executive told the Nikkei news service.
Apple and Amazon's names have surfaced before in connection with a possible bid to buy the chip unit, which Toshiba is selling to help offset massive losses incurred by its nuclear power business in the U.S. In March, Japan's Yomiuri Shimbun reported that Apple, Google and Amazon all three their hats in the ring as potential suitors.
Apple and Amazon are dependent on NAND flash memory for their consumer electronics offerings, including iPhone, iPad and the Alexa-powered Amazon Echo. Many of these products are built by Foxconn. Last week, market research firm DRAMeXchange reported that contract prices for NAND rose 20 to 25 percent in the first quarter, stabilizing the price of NAND in what is traditionally a slower time of year for memory chip sales.
Foxconn reportedly bid more than $27 billion, more than any other bidder is thought to have offered, to acquire the semiconductor business of Toshiba, which is second in NAND sales worldwide behind Samsung. However, Foxconn, which is based in Taiwan and has a large number of manufacturing facilities in China, is considered a longshot to land the asset because the Japanese government is wary of giving China access to Toshiba's NAND technology.
Speculation has been that the participation of Apple and Amazon could give weight and credibility to the Foxconn bid, perhaps enough to soften concerns about China.
Other bids that are reportedly still being considered include those made by Broadcom Corp. with private private equity investor Silver Lake Partners and another by South Korea's SK Hynix. A joint bid by private equity firm Kohlberg Kravis Roberts (KKR) and Innovation Network Corp. of Japan (INCJ) is also among those still being scrutinized by Toshiba and could have the inside track because of its participation by a Japanese public-private partnership.
Western Digital Corp., Toshiba's partner in NAND technology development and manufacturing, has also decided to seek a smaller stake in Toshiba's chip business than originally planned, according to a report Monday (June 5) by the Japan Times. WD originally wanted to acquire a majority of the unit but has not decided to seek a 20 percent stake in an effort to reach a compromise with Toshiba, according to the report.
WD last month requested an arbitration through the International Chamber of Commerce over Toshiba's plans to sell the chip business, saying Toshiba was contractually bound to seek WD's approval and give WD exclusive rights to negotiate the purchase of the business.
"My take on all of this is that the investing parties may change around before the final deal is struck. Toshiba needs to face the hard reality that WD will want a say in who its next partner will be and will fight hard to have that right," said Jim Handy, a veteran memory chip analyst and principal at Objective Analysis.
—Dylan McGrath is the editor-in-chief of EE Times.