Toshiba to Sell Memory Chip Unit to Consortium That Includes Apple

Tuesday September 19, 2017 11:47 PM PDT by Juli Clover
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.

Tag: Toshiba
18 comments


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Michaelgtrusa
20 months ago
Better this way than some other offers.
Rating: 3 Votes
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ApfelKuchen
20 months ago
This won't be over 'til Western Digital has its day in court (or is that mediation?), sometime in 2018.

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.
Rating: 3 Votes
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Kabeyun
20 months ago

This won't be over 'til Western Digital has its day in court (or is that mediation?), sometime in 2018.

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.

Back when Tim Cook was running supply chain for Steve Jobs he was a master of buying up NAND to the point where competitors had difficulty maintaining end product volumes. This was before Samsungs and Huaweis and Xiaomis and LGs. Now, iPhone isn't the defacto smartphone anymore and I think it makes sense to own a piece of that supply chain rather than count on satisfactory contracts.
Rating: 2 Votes
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macs4nw
20 months ago
If this goes through, it should give Apple even more priority access to the vast amounts of required flash memory, than they already have, especially with SK Hynix in the mix also.
Rating: 2 Votes
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jdiamond
20 months ago
This is not about Toshiba's current flash production, but their next generation low-latency / high bandwidth flash technology. Like the way HBM from AMD has literally changed the future of computing, low-latency flash is going to provide literally a once in 20 years massive change to the entire computer industry. There's no way to understate how important this is, how much it will change the landscape. And right when Toshiba was about to unveil it, the whole nuclear reactor business tanked. This is the best scenario we could hope for.

For those that haven't heard of low-latency flash, imagine a memory technology that has 1/4 the latency of 3D XPoint, 20x the bandwidth, and 1/20th the cost. You can point your system swapfile there, and suddenly have a (slightly sluggish) terabyte of DRAM for about $250. As long as you can block your data for the amount of real DRAM you have (say 32GB), you'll barely notice the difference between a cheap laptop and a $10,000 server.

Just to clarify how this is different from a conventional flash SSD, the extremely low latency and massively high bandwidth bring its performance much closer to that of DRAM than previous flash. In fact, the bandwidth can easily exceed that of DRAM for a single drive.
Rating: 1 Votes
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Mike MA
20 months ago
Less suppliers means less competition means...
Rating: 1 Votes
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Glassed Silver
20 months ago

This won't be over 'til Western Digital has its day in court (or is that mediation?), sometime in 2018.

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.

Right on the money.

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
Rating: 1 Votes
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cube
20 months ago
Dude, you're getting a Dell! (and Apple).
Rating: 1 Votes
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PickUrPoison
20 months ago
The best option for Apple, since they’re not likely to start making their own. Guarantees supply of a commodity component that is (currently) in short supply.
Rating: 1 Votes
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