Apple Joins 'Last-Ditch' Bidding Effort to Win Toshiba's Memory Chip Unit [Updated]

[MacRumors]

Bidding for Toshiba's much-sought-after memory chip unit was supposed to end in June 2017, after first kicking off in March, but the manufacturer is still fielding bids from multiple interested parties, most recently including a $17.4 billion offer from Western Digital. Likely due to Western Digital's legal action against Toshiba's decision to sell the NAND chip unit, talks surrounding that offer have reportedly "stalled" and now a new consortium of companies -- including Apple -- has entered a "last-ditch" effort to win the bidding.

Led by Boston-based global investment firm Bain Capital, the consortium also includes Apple and South Korean chipmaker SK Hynix (via Reuters). This group plans to offer Toshiba $18.2 billion for its memory chip unit, with a goal of reaching a final decision by Thursday, August 31 now "unlikely." This is said to be due to bickering over exactly how much Western Digital might own of the memory chip unit after it's sold, no matter who wins the bidding, because of the Western Digital's business ties with Toshiba.

A consortium led by Bain Capital has made a revised last-ditch offer for Toshiba Corp's chip unit worth about $18 billion, bringing in Apple Inc to help bolster its bid, sources with direct knowledge of the matter said.

The revised offer is worth some 2 trillion yen ($18.2 billion). Bain and South Korean chipmaker SK Hynix Inc will be responsible for 1.1 trillion yen, while Apple will provide up to 400 billion yen and Japanese banks will give around 600 billion yen in support, one of the sources said.

Many companies have entered bidding proposals for Toshiba's memory chip unit this year, including TSMC, Foxconn, Amazon, Google, Broadcom, and multiple private equity firms. Apple has already been associated with bidding interest as well, reportedly willing to spend several billion dollars to obtain a "substantial stake" -- potentially more than 20 percent -- of the chip unit. If Bain Capital's bid is the winner, Apple's stake would likely remain around that percentage.

Toshiba confirmed plans to sell its NAND flash memory unit in January 2017, as a way to raise funds that the company hopes will cover significant losses associated with its U.S. nuclear subsidiary Westinghouse. If part of the winning bid, Apple could obtain a stake in a unit that already provides flash storage to the Cupertino company, including 32GB, 128GB, and 256GB flash storage for the iPhone 7 and iPhone 7 Plus.

Update 9/7: Yet another group of interested companies has formed to press forward in trying to win Toshiba's memory chip unit as the end of bidding grows nearer: Foxconn is leading the consortium, with Apple, SoftBank, and Sharp showing their support.

Article Link: Apple Joins 'Last-Ditch' Bidding Effort to Win Toshiba's Memory Chip Unit [Updated]

 

[adamjackson]

There's a huge advantage to owning the end to end and while NAND Flash is not going away any time soon, Apple's bottom-line is generally helped by the fact that Apple is a design house that partners with suppliers & manufacturers to tool & create what Apple designs. By owning the supplies & manufacturing, it puts Apple at a larger financial risk when technologies cost more than anticipated to develop or manufacture or a technology is no longer needed and thus the investment is sold off.

I think Displays & NAND are the two areas Apple will need access to for a long time which is why this investment is so important. Investing their own money in a new chip process or Bluetooth hardware is less important. Better to just buy wholesale from another company that is taking on the risk of inventing and manufacturing these technologies Apple needs for just a few years.

 

[ElZamo92]

Well, I guess that's it for OCZ. This is another case of mobile phone manufacturers ruining the market for DIY PC builders.

 

[lowendlinux]

Well, I guess that's it for OCZ. This is another case of mobile phone manufacturers ruining the market for DIY PC builders.

OCZ did a rather fine job of ruining it's own reputation

 

[Appleaker]

I truly hope they get it.

 

[flyinmac]

With Western Digital looming overhead, it does seem that it would be difficult to sell the manufacturing / chip production branch of Toshiba.

How do you value a unit when you don't even know how much of that unit you'll be getting?

And what if potential buyers aren't excited about being partnered with Western Digital in the venture?

It would be far more enticing if the liability to Western Digital was settled.

Essentially it is Toshiba's share of the production unit that is for sale. But it hasn't been established what share Toshiba owns.

 

[JamesPDX]

Western Digital: I nearly wept when they bought Hitachi/HGST.

 

[Rocketman]

Toshiba is for sale for roughly $19B. Western digital who is competing to buy Toshiba has a market cap of roughly $29B. The hedge fund and consortium Apple is a member of could just buy both. Add one or two of the hedge funds backing Western Digital.

This move would cover not only the portable device marketplace, but also the server farms. If Apple were for example to have a 25% stake in the combined business, that would be about $50B/4 or about $12.5B. Not much different from that they paid for their biggest acquisitions, but far more immediate benefit to the products on their runway.

 

[Michaelgtrusa]

I'd rather see them keep it but would you rather it fall into the wrong hands?