Is Apple considering a 20pc stake in Toshiba’s chip business?

14 Apr 2017

Toshiba sign in Vietnam. Image: Anton_Ivanov/Shutterstock

Rumours abound for Toshiba to receive much-needed cash injection from Apple.

Apple is reportedly considering teaming up with Taiwanese contract manufacturer Foxconn to acquire a 20pc stake in Toshiba’s semiconductor business.

Toshiba is the world’s second-biggest flash memory chipmaker, but has put its chips business up for sale to make up for a write-down of $6.5bn in its US nuclear equipment operations.

Western Digital, one of the chipmaker’s business partners and a bidder, warned that Toshiba would be violating a joint venture contract by selling.

Western Digital wants to be given exclusive negotiating rights.

A twist in the tale of Toshiba’s semiconductor odyssey

The twist emerged overnight when Japanese broadcaster NHK reported Apple and Foxconn’s interest in acquiring 20pc of Toshiba.

Apple and Foxconn’s motivation to take a stake and allow Toshiba to retain a partial share is driven by a need to allay Japanese government concerns over any transfer of sensitive technology – that it deems a risk to national security – to investors.

There have been four main suitors for Toshiba’s semiconductor business: US chipmaker Broadcom in partnership with Silver Lake Partners, South Korean chipmaker SK Hynix, Foxconn and Western Digital.

The inclusion of Apple in the race adds a layer of complexity to the bidding war, but makes sense given the iPhone maker’s dependence on its smartphone cash cow.

Toshiba chips feature in smartphones but also computers and data centres.

The Japanese companies share plunge was shaken somewhat by the news, with the decline slowing to 4.8pc overnight from 8.1pc earlier yesterday (13 April). Overall, Toshiba’s stock is down about 29pc this year.

Toshiba sign in Vietnam. Image: Anton_Ivanov/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years