Foxconn (TPE:2354) Wants to Acquire the Chip Business of Toshiba (TYO:6502)

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There have been rumors for a while now that Foxconn Technology (TPE:2354) of Taiwan, the world’s biggest contract electronics maker, is keen to buy the chip business of Toshiba. It is now official. On Wednesday, the company founder and chairman Terry Gou confirmed this, ending all speculations. This is the first time Foxconn has confirmed their interest in Toshiba.

However, Gou did not confirm whether the bid has been submitted officially already. But he commented that money should not be the only consideration.

He was speaking at Guangzhou in south China, where Foxconn’s subsidiary is coming up with a $9 billion mega display factory. Here, they will turn out 90,000 displays every month by using the largest available glass substrates.

Loss Making Toshiba Unit Goes On Sale

The memory chip division of Toshiba Corp’s (TYO:6502) is currently making a loss. Last month, the Japanese company disclosed they want to sell off their memory chip unit to another business to alleviate their financial problems, especially after their $6 billion loss in the US nuclear power business. According to reports, they have already sent letters soliciting offers. Toshiba is expecting to fetch $13 billion from the successful bidder. Foxconn already has some competition, as Western Digital, private equity firms, Micron Technology, SK Hynix of South Korea, and Japanese banks have shown interest.

But it remains to be seen whether Toshiba will get the money they want, as their memory chip business is currently making a loss.

Foxconn is Confident of Acquiring Toshiba’s Unit

Foxconn Technology is confident, though, that their efforts to acquire Toshiba’s unit will be successful. Gou said, “I cannot say we are for sure getting it, but we are very confident. We have the experience of buying Sharp Corp. We are sincere and confident about investing in Toshiba”.

Gou added Foxconn is already a partner and client of Toshiba, and this should help in at least starting the talks.

If successful, it will be an important acquisition for the Taiwanese business. Toshiba is the world’s second-largest NAND flash memory chip maker after Samsung of South Korea, which is also in trouble following a bribery scandal and the arrest of their Vice Chairman Jay Y. Lee.

Foxconn (TPE:2354) is presently developing ultra-high-resolution 8K technology, for which they need a lot of memory chips, and thus the interest in Toshiba. “We need the memory products. We need Toshiba”, Gou added.