Published: Sat, April 15, 2017
Markets | By Erika Turner

Apple may buy stake in Toshiba's semiconductor business

Apple may buy stake in Toshiba's semiconductor business

Citing sources familiar with the matter, NHK says that Apple is looking at several potential partners for the bid, including electronics maker Foxconn, which has already considered making a substantial bid of its own.

Toshiba made a decision to put the prized asset up for sale in January in an effort to offset a almost $6 billion (£4.8 billion) loss related to its overseas nuclear division and is understood to want a quick deal. Therefore, giving control of Toshiba's memory business to Foxconn, a company headquartered in Taiwan that has close ties to China, isn't something the Japanese government is very happy about.

Foxconn remains the world's largest manufacturer of the iPhone, and reports earlier this week indicated that the Taiwanese company was willing to pay $27 billion for Toshiba's semiconductor unit. The iPhone maker doesn't want to buy Toshiba outright, according to those reports.

Today, a Reuters report confirmed that now Toshiba has narrowed the field of bidders for its chip unit to four suitors: Broadcom, SK Hynix, Western Digital and Foxconn.

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The Nikkei Asian Review has reported that Toshiba may sell a 20% stake in the memory business for between $1.77 billion and $2.65 billion, "while retaining a majority stake and keeping the new company in group earnings". Toshiba spokeswoman Kaori Hiraki declined to comment. Toshiba is offering from 50 percent to 100 percent in the lucrative flash memory whose prospects are bright due to explosive demand for the chip to power mobile devices. Foxconn's Terry Gou acquired Japan's Sharp a year ago, so Gou has the know-how to work with the Japanese government. 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. Toshiba would then keep the remainder.

Apple's support for the FoxConn bid would hand a key advantage to the company over a rival bid from a fellow Apple supplier Broadcom. "Apple would have Toshiba keep some shares so the Japanese and United States firms combined will have a majority stake", Japan's public broadcaster NHK reported.

Toshiba could even retain a partial stake in the chip venture itself to smooth things out with regulatory authorities.

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