Home Technology Apple To Partner With Foxconn To Buy Stake In Toshiba Chip Unit [REPORT]

Apple To Partner With Foxconn To Buy Stake In Toshiba Chip Unit [REPORT]

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Apple is looking to collaborate with Foxconn on a multi-billion dollar investment in Toshiba’s chip business, according to public broadcaster NHK. Flash memory is a pricey affair, and therefore, Apple could be interested in acquiring the unit in order to enhance the storage capacity of its iPads and iPhones.

Western Digital warning – Entry of Apple could complicate the process

The Cupertino-based company is reportedly looking to invest several billion dollars to acquire a more than 20% stake, which would enable Toshiba to maintain a partial stake in order to the business both under United States and Japanese control. Such an arrangement could allay the Japanese government’s concerns about any transfer of sensitive technology to investors, which it categorizes as a threat to national security, the report said.

NHK’s report arrives amid a warning by Western Digital (Toshiba’s partner and one of the bidders for Toshiba’s unit) that the firm is violating their joint venture contract by selling the chip unit. The company also stated that it should be given exclusive negotiating rights, notes CNBC.

After the warning by Western Digital, Apple’s recent interest will give way to more complexities, as the company is cash-rich and has big influence as the maker of the iPhone, notes Bloomberg. If the U.S. firm wins the bid, it will not only be able to design its own flash memory, but it will be a major setback for Samsung.

Many interested buyers

The Japanese company has already narrowed down the list of contenders for the chip business after the initial round of bidding. Taiwan’s Hon Hai Precision also looks interested in paying about 3 trillion yen for the unit, reports Bloomberg. Others said to be interested in taking over Toshiba’s business are American chip maker Broadcom, which is teaming up with PE firm Silver Lake for its $17.9 billion bid. Other big names such as Google, Micron, TSM and Amazon are also reportedly in the race.

On one hand, major clients such as Apple and Samsung are interested in buying NAND flash units, and on the other, companies like Google and Amazon are interested in buying the unit to supply their own data servers rather than depending on outside chip makers.

Why is Toshiba selling its chip unit?

Toshiba is currently in the middle of a profit padding scandal dating back to 2015, which resulted in record losses. However, due to investor pressure, the company is now looking to cover up those losses by selling its business. Toshiba’s losses are mounting sharply and have reached to a massive $9 billion, notes TechPortal.

Toshiba is looking to sell its chip business to balance the write-down of 716.6 billion yen ($6.56 billion) from its U.S. nuclear equipment operations. The company supplies memory chips for smartphones, data centers, and personal computers to offer an alternative to hard disks.

Toshiba stands only second to South Korean chip giant Samsung. Although the company has now ventured into the flash memory business, it is marred by sluggishness.

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Aman Jain
Personal Finance Writer
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