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Showing posts for April 2017

21 April 2017

Who Wants Toshiba Memory?

With the Toshiba conglomerate struggling financially due to the losses incurred by its nuclear division in the United States, the Japanese firm’s management has made the decision to sell off its successful chip manufacturing arm (Toshiba Memory) in a bid to secure the company’s future.

The frontrunners in the race to purchase Toshiba Memory are Apple, the global electronics giant, SK Hynix, the world’s second-largest manufacturer of DRAM memory products, and Hon Hai Precision Industry, better known as Foxconn. However, various news outlets, including the New York Times, have reported that the Japanese government will attempt to block bids from companies based outside of Japan, due to fears that key intellectual properties, job and manufacturing facilities will be moved out of the country.

This stance, whilst understandable, is problematic for many of Toshiba Memory’s suitors – which is why they are exploring numerous avenues to secure a favourable position in the bidding war.

Earlier this week The Japan Times published an article saying that Apple is in the midst of exploring a variety of options that will, hopefully, secure them Toshiba’s memory-making business. The report states Apple has thought about launching a joint bid with Foxconn, but, interestingly, that the iPhone manufacturer has started to sound out Japanese investors. A source, who wished to remain anonymous, told the media outlet that SoftBank could be one of the potential investors.

It is believed that a partnership between Apple and SoftBank would be favourably received by both the Japanese and American governments. Though this is all completely hypothetical at this moment in time.

Another favourite to secure Toshiba Memory is Foxconn.

Early reports indicated that the Taiwanese-based electronic manufacturer was willing to overpay in order to force Toshiba to the negotiating table. Although Toshiba Memory has been valued in the region of $18 billion, Foxconn’s hierarchy was ready to pay $27 billion.

However, recent news stories indicate that Foxconn may be preparing a proxy bid through one of their Japanese subsidiaries, Sharp.

By proposing a deal with Sharp, Foxconn may be able to avoid any attempts by the Japanese government to block the deal, as, in theory, Toshiba Memory would remain under Japanese ownership.

“We’re not going to make profits by keeping our cash in banks,” a Sharp executive told the Asian press earlier this week, hinting at an impending move.

Whilst Foxconn, Apple and Sharp have been relatively coy about their formal intentions, SK Hynix has made some rather public overtones about a potential bid in recent days.

Earlier today (21st April), the Nikkei Asian Review published a news report stating that key representatives of the Korean memory manufacturer will be travelling to Tokyo to discuss a deal.

Chey Tae-won, the chairman of SK Hynix’s parent company, SK Holdings, is set to visit Japan early next week. In an effort to appease concerns about a foreign firm taking control of Toshiba Memory, it is believed that he will unveil plans that include further investment at Toshiba’s Yokkaichi fabrication factory and a commitment to keep jobs in Japan.

11 April 2017

Toshiba posts $4.8 billion loss, looking to sell its semiconductor business

When Westinghouse, Toshiba’s United States-based nuclear unit, filed for bankruptcy late last month, it set off a chain reaction of events that have plunged Toshiba’s very existence into doubt.

Now, less than a fortnight on, Toshiba Corporation has taken the unprecedented step of publishing its delayed financial results without prior approval from the firm’s external auditors.

Back in February, the company had forecast a $3.5 billion loss for the fiscal year. However, the recently released results indicate that Toshiba has in fact posted a loss of $4.8 billion for the period of April-December 2016.

Although the majority of Toshiba’s financial losses stem from issues relating to Westinghouse, the impact has been felt across the entire conglomerate.

In a bid to stay afloat, the company is attempting to sell off some of the most viable parts of its vast portfolio.

The Tokyo-based conglomerate has over 600 different businesses, with interests in everything from light bulbs to elevators, but its most viable – and financially attractive – asset is its semiconductor business, which makes flash-memory chips for use in mobile phones, tablets and other similar devices.

It is believed that Toshiba has valued its semiconductor business at $18 billion but Foxconn, formally known as Hon Hai Precision Industry, has indicated that it may be willing to shell out $27 billion in order to force the Japanese firm to the negotiating table.

Based in Taiwan, Foxconn is the world’s largest contract electronics manufacturer and has a roster of high-profile customers that include Apple, Sony and Microsoft. Despite the potentially high-value bid, Foxconn’s move will face stiff resistance from the Japanese government due to fears that the company will move both manufacturing and crucial intellectual property out of the country.

Another leading name believed to be interesting in acquiring Toshiba’s semiconductor business is SK Hynix. An unnamed source, quoted by Bloomberg, has said that officials at the South Korean firm are looking into the feasibility of launching a joint bid with a Japanese-based investment group to secure preferential treatment. However, there are anti-trust fears over this bid, as well as the worry that Hynix may be able to buy its partners out to gain full control in the future.

Whilst the future of Toshiba’s semiconductor arm is in the air, the 142-year-old conglomerate has sought additional financial support from financial centres, even offering real estate as collateral.

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