According to reports, the California-based multinational tech firm Apple (NASDAQ:AAPL) is considering placing a bid to acquire the semiconductor business of Toshiba (TYO:6502), which is the world’s second-biggest flash memory chipmaker. If the bid eventually goes through, then it will be together with Apple’s supplier Foxconn. The news was first reported by the Japanese public broadcaster NHK.
Concern in Japan About the Apple Bid
The bid will be for more than several billion dollars because Apple reportedly wants at least a 20 percent stake. However, Toshiba is said to still maintain a partial stake in the business to ensure that it stays under Japanese and US controls. With news of these developments coming through, the Japanese government has expressed their concerns about the transfer of sensitive technology, which might pose a risk to national security.
Japan says they do not want important Japanese semiconductor technology to go into foreign ownership.
Apple has not yet issued any comments about these reports or the news that there is concern in Japan about the potential takeover bid. Foxcon of Taiwan, which was formerly known as Hon Hai Precision Industry have declined to comment. Foxcon is best known for manufacturing the iPhone.
Toshiba Selling the Chip Business to Recover From Westinghouse
The memory chip segment is a prized possession of Toshiba, but they are trying to sell it off now because the company is still trying to recover from the multibillion-dollar loss caused by the Westinghouse debacle. The company has incurred billions of dollars of loss from delays and cost overruns on projects in Georgia and South Carolina.
Toshiba released their first financial report in nine months recently. They reported a loss of $5.9 billion dollars mainly because of the problems the company faced in their nuclear power business, Westinghouse. However, they were still able to report a profit of profit of $934 million for the memory chip business. Total sales for the segment stand at $5.8 billion according to the latest figures.
The company is presently accepting bids for the memory chip business. Many companies have shown interest, but Toshiba has reportedly narrowed it down the bidders to just four – the chipmaker from America Broadcom, SK Hynix from South Korea, Western Digital, and Foxconn.
In the meantime, Western Digital has already requested Toshiba that they be given exclusive negotiating rights. Western Digital is a partner of Toshiba (TYO:6502).