Toshiba has narrowed the list of bidders for its lucrative semiconductor business to a small group that includes Western Digital’s rivals such as Apple’s favorite contract manufacturer Foxconn, memory chip maker SK Hynix and wireless chip maker Broadcom. Western Digital, however, feels that Toshiba should negotiate with it first.
In a new Bloomberg report Thursday, Western Digital has confirmed it’s currently in talks with Japanese government-backed investment funds regarding a potential deal with the Japanese conglomerate. Mark Long, Western Digital’s CEO, hinted that his company has held discussions with Apple as it tries to win a battle for Toshiba’s flash memory unit.
Western Digital acquired SanDisk last year for a reported $15.8 billion, becoming Toshiba’s manufacturing partner. The US storage maker “had conversations with almost everyone” involved in the bidding process.
We think very differently, our priorities, first and foremost are focused on the joint venture remaining competitive. While others are working through a process, we have a clearer picture of what the business should be valued at and how to think about other things that affect value.
We have lots of different ways to participate in the solution than other players. It’s more complicated than a single number.
Among other potential bidders for Toshiba’s memory biz are three Apple suppliers.
The Japanese government could prefer Western bidders over their Chinese and Taiwanese counterparts on the grounds of national security. For example, the government opposes a bid by Foxconn out of fear that the supplier could move Toshiba’s semiconductor manufacturing and intellectual property into China.
This leaves American bidders such as Broadcom, Western Digital, Bain Capital and other US-based companies as the only feasible partners from Japan’s national security standpoint.
Toshiba is selling its chip business after its US nuclear unit Westinghouse Electric sought Chapter 11 protection, throwing its Japanese parent into crisis following a one-off $6.3 billion writedown in December 2016.
Apple itself is said to be among the potential bidders. Toshiba is Apple’s key supplier of flash memory chips that are commonly used in mobile and desktop Apple products. The conglomerate’s semiconductor unit is valued at approximately $27 billion.