Apple would love to say, ‘Thanks for the memories’, to Samsung.
Apple has joined a consortium that includes Bain Capital to make an $18bn bid for Toshiba’s chip business.
The move will give Apple a new source for memory chips as the smartphone wars against Samsung continue to heat up.
The California tech giant is expected to commit around $3.6bn to the potential deal, making it Apple’s biggest acquisition since the company acquired Dr Dre’s Beats Electronics for $3.2bn in 2014.
Toshiba is a glittering prize for Apple
Toshiba would be quite a prize for Apple. It is the world’s second-largest producer of NAND memory chips, which are crucial for smartphones, tablets and PCs.
Acquiring Toshiba would enable Apple to keep the price of its iPhone down, and reduce its dependence on market rival Samsung for components for its smartphones.
Apple’s decision to join the consortium comes as negotiations between Toshiba and Western Digital falter.
A combined Toshiba and Western Digital business could match Samsung’s memory business in size. Therefore, it is in Apple’s best interests to move fast before it has to negotiate with a resurgent Toshiba with potentially more leverage.
As well as Bain Capital, the group also includes SK Hynix and some Japanese banks. If the deal is approved, both Bain and Toshiba will hold 46pc of the unit.
The key here is memory, and, in recent years, Apple has boosted the amount of memory on iPhone, iPad and Mac products.
For example, high-end iPhone models now boast 256GB of internal memory, and rumours are that the forthcoming iPhone 8 could have up to 512GB of storage, more than what is on many laptops.
The proposed acquisition of Toshiba’s memory business by Western Digital has been a rocky process so far and has been pockmarked by all kinds of legal threats.
An outcome for the deal is expected by Thursday next week (7 September) and that’s why the sudden emergence of the Bain-Apple consortium is timely and interesting.