After months of negotiations, Toshiba has decided to sell its memory chip unit to a global consortium that includes Bain Capital, SK Hynix, Dell, and Apple, reports Reuters.
No official announcement has been made by Toshiba as of yet, but the company is expected to announce the sale on Wednesday. As of Tuesday, Toshiba was said to be leaning towards a group backed by Western Digital, but Western Digital is said to have failed to agree to some of Toshiba's terms regarding limits on WD's future stake in the business.
Western Digital may still attempt to block the sale and is said to be prepared to seek a court injunction to stop it. Western Digital previously invested in Toshiba's semiconductor plant and claims its consent is required for the sale.
Toshiba first announced plans to sell its NAND flash memory unit in January of 2017 to raise funds to cover losses associated with its U.S. nuclear subsidiary, Westinghouse. Many companies, including TSMC, Foxconn, Amazon, Google, Broadcom, and a range of private equity firms entered bids in an effort to get a piece of the memory chip unit.
The consortium, led by Bain Capital, was selected as the preferred bidder in June, and in September, entered a higher bid amid fierce competition. Apple, SK Hynix, Dell, and Bain Capital are said to have offered a combined 2.4 trillion yen, equivalent to $22 billion, along with an additional 200 billion yen for infrastructure.
As of early September, Bain and SK Hynix were said to be providing a total of 567.5 billion yen, while Apple was reported to be offering 335 billion yen, equivalent to $3 billion. That sum is in line with reports suggesting Apple was prepared to spend several billion dollars for a "substantial stake" in the memory business.
Bain, Apple, Dell, and SK Hynix will own a combined 49.9 percent stake in the chip unit, with Toshiba keeping 40 percent and Japanese firms controlling the other 10.1 percent should the sale go through.
Apple already uses Toshiba's flash memory in its products. The iPhone 7 and iPhone 7 Plus include memory sourced from both Toshiba and SK Hynix.
Top Rated Comments
Overall, I find this interesting. It's a measure of the importance of the way in which chipmakers are approaching the manufacture of Flash. Clearly, companies like Apple and Dell can't trust the chipmakers to expand Flash production capacity sufficiently to lead to a drop in demand-driven pricing (like OPEC deciding how much petroleum to pump).
I once worked for a media company that owned large newspapers. They did something similar, buying part-ownership of paper mills to assure a stable supply.
It's ridiculous how NAND is basically the oil of the 21st century, let's hope this whole situation will get better in the mid-run.
Demand for storage is ever increasing and we are entering a period where, if supply was better, could soon replace HDDs with NAND for good, ESPECIALLY as we approach the peak of what is possible with HDDs nowadays. Not everyone wants to look at SMR technology as a good compromise of density, price and speed.
Glassed Silver:win