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[ggx2ac]

more at the link: http://asia.nikkei.com/Business/AC/Apple-Amazon-to-back-Foxconn-on-Toshiba-chip-bid-Gou-says

Last time, I posted an article related to Japan Display Inc and their financial losses for the last FY seeing as they are the supplier of the LCD screen used for the Nintendo Switch.

Now, we have Toshiba who is one of the suppliers for Nintendo's eMMC chips, the other being Samsung and this is a big deal in recent days since there are concerns over manufacturing of Switch units due to NAND memory shortages.

Chairman Terry Gou of key iPhone assembler Hon Hai Precision Industry , or Foxconn Technology Group, told the Nikkei Asian Review in an exclusive interview Sunday that his company has financial support from Apple and Amazon in its bid for the memory chip unit of embattled Japanese conglomerate Toshiba .

The Foxconn chairman has funding support from Apple and Amazon to offer more than $18.2 billion to bid on Toshiba's memory chip business:

According to sources, Hon Hai is the highest bidder among five interested buyers, supposedly offering more than 2 trillion yen ($18.2 billion).
"Of course Apple and Amazon are offering money together, but I cannot comment on how much funds each company is putting on the table," Gou said at a hotel in Osaka.

Apple and Amazon are major clients for Toshiba:

The Japanese firm is a major supplier for Apple's iPhones. Meanwhile, Amazon needs NAND flash memory chips in the servers it uses in its data centers to provide cloud computing services for itself and external customers.

Data centers are essential infrastructure for major tech companies such as Amazon, Facebook and Google to gather and analyze massive amounts of data and create next-generation technologies, such as artificial intelligence and driverless vehicles.

Samsung currently have the largest market share in NAND flash memory sales:

In the first quarter of 2017, Samsung generated $4.21 billion from its NAND flash business and enjoyed a 35.4% global market share, according to Taipei-based research firm TrendForce. Western Digital (17.9%) and Toshiba (16.5%) trailed the South Korean firm, while Micron and SK Hynix followed behind with respective market shares of 11.9% and 11%.

Toshiba wants to complete the sale of its memory chip business before the end of FY3/2018:

Toshiba is seeking to complete the sale of its memory chip business, the only profitable unit of the Japanese conglomerate, before the current fiscal year ending in March. It intends to use the proceeds to bolster its finances to compensate for massive losses at Westinghouse, its U.S. nuclear subsidiary.

The four other bidders vying to acquire Toshiba:

Four other bidders are vying to win Toshiba's memory unit alongside Foxconn. American chipmaker Broadcom, U.S. private equity firm Kohlberg Kravis Roberts, Toshiba's technological partner Western Digital, and South Korea's SK Hynix together with U.S. private equity firm Bain Capital have all made offers.

Chairman Gou's appeal to Toshiba and banks on why his bid should be considered:

Gou appealed to both Toshiba and its banks by saying he can help ensure the firm's debts will be honored and stating his commitment to retaining the Toshiba memory unit permanently if Foxconn wins the bid.

"We will definitely not undermine nor interfere with [Toshiba's existing management]. We will treat them like the way we have been treating Sharp," Gou said, adding that he was confident that Foxconn stood a good chance of winning the bid.

Sharp which was recently​ acquired by Foxconn is projected to have its first profit in four years:

Under Foxconn's control, Sharp is forecasting a net profit of 59 billion yen in fiscal 2017 after it posted a net loss of 24.8 billion yen the year before, the first time it made money in four years.

"We can help banks secure their Toshiba debts. We are not like private equity funds -- if they buy a business, they will resell them for a profit afterwards. But we hope to manage Toshiba for life," Gou said.

Chairman Gou is intent on having his company be as competitive as Samsung with the acquisitions including manufacturing their own products such as Nokia phones due to an acquisition from Microsoft and are financially backing the 'Essential Phone'.

The tycoon appears intent on building his manufacturing empire into another Samsung following his acquisition of Sharp, an iPhone panel supplier, and his ongoing efforts to snatch Toshiba.

Last year, Foxconn agreed to acquire Nokia's feature phone business from Microsoft. Foxconn is also making Nokia brand smartphones for Finland-based HMD Global, which has licensed the Nokia brand for 10 years.

On Saturday, Gou confirmed to the Nikkei Asian Review that his company was also financially backing and manufacturing the Essential Phone, designed by Android creator Andy Rubin.

The main point in all of this is how big a shortage could occur for NAND flash memory if Toshiba's memory business wasn't up for sale seeing as they had a 16% market share for the first quarter of 2017:

With Toshiba planning to spend more than 300 billion yen ($2.68 billion) on its NAND flash memory operations this fiscal year, there are no immediate worries about a lack of production capacity.

Because, concerns over shortages have pushed up the price of large-lot orders for NAND memory chips:

Concerns over supplies have pushed large-lot prices for the benchmark 64 gigabit multilevel-cell NAND flash memory chips to around $3.80, up 70% on the year.

Edit:

Credit to Calm Mind for finding the following:

Foxconn is Apple's primary contract iPhone builder, but also makes a vast range of other products, including Sony's PS4, the Amazon Kindle and, yes, Toshiba TVs and PCs (in Japan). It reportedly asked for Apple's help (and vast money stocks) to back the bid, which is reportedly as high as $28 billion, versus a valuation of around $18 billion.

https://www.engadget.com/2017/06/05/apple-and-amazon-stake-toshiba-memory-flash-foxconn/

Edit 2:

New news: http://m.neogaf.com/showpost.php?p=239434696

Edit 3:
Other stuff you can scroll down to see.


Edit 4:

Dell and Kingston join in:
http://m.neogaf.com/showpost.php?p=240263237

Edit 5:

What a mess:

http://m.neogaf.com/showpost.php?p=240970027

Edit 6:

Toshiba has a preferred bidder:

http://m.neogaf.com/showpost.php?p=241410343

Here's the official statement: http://www.toshiba.co.jp/about/ir/en/news/20170621_1.pdf

 

[SinCityAssassin]

Wonder if they can court another supplier if the bigger companies up the price too high.

 

[Lucumo]

Toshiba is seeking to complete the sale of its memory chip business, the only profitable unit of the Japanese conglomerate, before the current fiscal year ending in March. It intends to use the proceeds to bolster its finances to compensate for massive losses at Westinghouse, its U.S. nuclear subsidiary.

Ouch, didn't realize Toshiba was doing this badly.

 

[Serenitynow]

Does this affect Nintendo at all?

 

[ggx2ac]

Ouch, didn't realize Toshiba was doing this badly.

Westinghouse going bankrupt is the reason Toshiba is in this mess.

They've already lost billions of dollars and are possibly doing a write down of almost $10 billion in losses.

That's why this memory chip business sale is a big deal since it's one of their most profitable units.

Does this affect Nintendo at all?

They are already affected by NAND memory shortages.

If Toshiba's memory unit is acquired by Foxconn it could lead to lead to new manufacturing plants like with their acquisition of Sharp. Meaning more production of NAND memory which should help ease the severity of shortages which causes manufacturing costs to rise.

 

[Lucumo]

Westinghouse going bankrupt is the reason Toshiba is in this mess.

They've already lost billions of dollars and are possibly doing a write down of almost $10 billion in losses.

That's why this memory chip business sale is a big deal since it's one of their most profitable units.

This also reminds me of Sprint with their $30+ billion debt and SoftBank.

 

[Serenitynow]

They are already affected by NAND memory shortages.

If Toshiba's memory unit is acquired by Foxconn it could lead to lead to new manufacturing plants like with their acquisition of Sharp. Meaning more production of NAND memory which should help ease the severity of shortages which causes manufacturing costs to rise.

Gotcha. I didn't know if Amazon and Apple backing Foxconn meant that, should Foxconn's bid be accepted, Amazon and Apple would get priority of the chips.

 

[ggx2ac]

Gotcha. I didn't know if Amazon and Apple backing Foxconn meant that, should Foxconn's bid be accepted, Amazon and Apple would get priority of the chips.

They already do since Foxconn gets half their revenue from Apple alone.

What we'd want is more manufacturing plants being built because NAND shortages are being exacerbated by investments into AI and IoT.

 

[Calm Mind]

$28B

 

[Rncewind]

seems like some guys are not gonna get a switch until end of 2018 lol

 

[mocolostrocolos]

This could lead to major shortages of the Switch for a long time.

 

[Shizuka]

What's the tl;dr? I haven't been following this closely.

 

[OrbitalBeard]

seems like some guys are not gonna get a switch until end of 2018 lol

This could lead to major shortages of the Switch for a long time.

If anything, this should help Nintendo.

 

[The Horror the horror]

If anything, this should help Nintendo.

How?

 

[OrbitalBeard]

How?

Increased manufacturing. It'll take awhile though.

At the very least, this isn't going to make things worse for them.

 

[Skittzo0413]

How?

Read the conclusions in the OP and ggx2ac's later post. If this bid goes through there will be many new manufacturing plants for NAND flash which would alleviate the shortages for everyone, not just the likes of Apple and Amazon.

 

[Ex-Psych]

Well that's good.

 

[Shin]

It's really shitty in terms of electronics that the world depends on China, Korea & Taiwan so much.
There should be some kind of organization that balances things out on a global scale to keep prices in check.
Pretty much all the Japanese companies are suffering due to cheaper labor from the above mentioned countries.

On-topic: I don't know which Japanese company is in a healthy state, everything is doom & gloom and/or companies or their divisions being sold off.
Not really the thing you really want as a consumer, having 1-2 choice, it's really odd.

 

[Rncewind]

If anything, this should help Nintendo.

yeah you are right i didnt read it correctly

 

[ggx2ac]

New news, more at the link: http://asia.nikkei.com/Spotlight/To...US-team-Broadcom-lead-race-for-Toshiba-Memory

The battle to acquire Toshiba's memory unit is entering its final stages, with a Japanese-American consortium -- potentially including Toshiba partner Western Digital -- and a team led by U.S. chip company Broadcom emerging as the two front-runners.

Western Digital is seeking alliances with Japanese government backed institutions:

Western Digital CEO Steve Milligan has called for an alliance between the American hard-drive maker and Japanese institutions, including the public-private Innovation Network Corp. of Japan and the government-backed Development Bank of Japan, out of consideration for the Japanese side's concerns. Western Digital will continue investing in joint chipmaking operations with Toshiba in Japan, including building a new plant and preserving engineers' jobs, he said Tuesday.

(Note: Western Digital/SanDisk have a history with Toshiba, related article explaining it in the link here: http://asia.nikkei.com/Business/Companies/Advanced-chip-fab-drives-Toshiba-Memory-s-18bn-price-tag )

Western Digital plans to bid for the ¥1.8 Trillion valuation. Refuses to let another company win the buyout.

It refused to approve any transfer of the operations to another company and insisted on a controlling stake, a demand on which it has recently softened. The American company reportedly also plans to raise its total offer, including contributions from partners, to Toshiba's asking price of around 2 trillion yen ($18.3 billion) from about 1.8 trillion yen.

Japanese government likely supports the US-Japan alliance with Western Digital due to concerns of Toshiba leaving the country.

The Japanese government, worried about the prospect of Toshiba technology leaving the country, likely supports this alliance given the heavy Japanese involvement.

Broadcom apparently submitted a ¥2 Trillion bid. Tokyo (Government?) would likely accept selling the company to a US business due to concerns of technology leaking to China.

Meanwhile, the Broadcom camp is believed to have submitted a bid of more than 2 trillion yen. Since Broadcom is not in the memory business, a deal would likely clear antitrust reviews quickly.

Tokyo would likely accept the sale of Toshiba Memory to an American company, since its main concern is with technology leaking to China.

We would expect things to be finalised this month:

Toshiba plans to pick a buyer this month.

 

[ec0ec0]

Awesome thread ggx2ac

I'm glad i runned into it

 

[Rogue Agent]

Thanks for these updates.

 

[1st Course]

Toshiba aims to name buyer of $18 billion chips business on June 15

https://www.reuters.com/article/us-toshiba-accounting-western-digital-idUSKBN18Y27O

Sources told Reuters the choice has narrowed to one bid from U.S. chipmaker Broadcom Ltd (AVGO.O) and U.S. tech fund Silver Lake and another from Toshiba chip partner Western Digital Corp (WDC.O) and Japanese government-related investors.

From the article it looks like Broadcom-Silver Lake is going to win the bid.

Toshiba is the last Japanese memory maker after Elpida was sold so it's no wonder the Japanese government is getting wary over this deal.

Toshiba Memory is the nation's sole survivor in the memory chip industry, and concerns are growing that if it is bought by a foreign company, Japan will be out of the market.

http://asia.nikkei.com/Business/Trends/Japan-struggles-to-keep-Toshiba-Memory-domestically-owned

 

[SinCityAssassin]

Yeah that ain't Nintendo, lol.

 

[ggx2ac]

Toshiba aims to name buyer of $18 billion chips business on June 15

https://www.reuters.com/article/us-toshiba-accounting-western-digital-idUSKBN18Y27O


From the article it looks like Broadcom-Silver Lake is going to win the bid.

Toshiba is the last Japanese memory maker after Elpida was sold so it's no wonder the Japanese government is getting wary over this deal.


http://asia.nikkei.com/Business/Trends/Japan-struggles-to-keep-Toshiba-Memory-domestically-owned

Hmm...

So there's E3 and this next week.

 

[Calm Mind]

Japan would be a fool if they let Toshiba slip from their grasp.

 

[ggx2ac]

http://asia.nikkei.com/Business/Companies/Western-Digital-might-raise-offer-for-Toshiba

Things aren't looking favourable for Western Digital in their negotiations with Toshiba.

In the proposal Western Digital is considering, the U.S. company would give up on acquiring a stake in Toshiba Memory at the time of purchase. Western Digital would still provide funding to Toshiba through a corporate bond deal. This could make it easier for the eventual acquisition to clear an anti-monopoly review.

Under this potential proposal, Western Digital would also pitch in more for Toshiba Memory, thus bringing the total purchase price close to Toshiba's requested "around 2 trillion yen" ($18.1 billion). Western Digital is trying to join a consortium led by the Innovation Network Corp. of Japan that would then bid for Toshiba Memory.

Western Digital CEO Steve Milligan and Toshiba President Satoshi Tsunakawa met on Friday. But the talks apparently did not go well, largely because Tsunakawa remained skeptical about the feasibility of Milligan's plan to join the Innovation Network-led consortium in a 1.9 trillion-yen bid for the chipmaker.

On Saturday, The Nikkei learned that Milligan may kick in more money so the consortium's bid would be at least 2 trillion yen.

Still a week to go until Toshiba decides a buyer.

 

[Calm Mind]

http://asia.nikkei.com/Business/Companies/Western-Digital-might-raise-offer-for-Toshiba

Things aren't looking favourable for Western Digital in their negotiations with Toshiba.



Still a week to go until Toshiba decides a buyer.

I have a feeling a deal between WD and INN Japan would be favorble because of national pride. That is if they can outbid Apple and Amazon. *crosses fingers*

 

[PdotMichael]

Investing in nuclear energy. Some people have crazy ideas.

 

[ggx2ac]

http://asia.nikkei.com/Business/Com...ton-to-join-Foxconn-bid-for-Toshiba-chip-unit

Amazon, Apple, and now Dell and Kingston are financially backing Foxconn for the bid on Toshiba's memory business unit.

Hon Hai Precision Industry , also known as Foxconn Technology Group, said that PC giant Dell and memory maker Kingston Technology will join Apple and Amazon in backing his company's bid for the memory chip unit of embattled Japanese conglomerate Toshiba .

Gou said the arrangements would allow Foxconn to own a 40% stake in the Toshiba memory business.

Gou did not reveal the contributions from each company, but he said Foxconn, together with its Japanese subsidiary Sharp, will own about a 40% stake in Toshiba's memory chip unit if the deal goes through.

He would consider making memory chip facilities in the US if he wins the bid.

Gou said he would also consider setting up memory chip facilities in the U.S. if Foxconn wins the bid.

 

[ggx2ac]

More at the link:
https://www.wsj.com/articles/toshiba-falls-behind-in-chip-development-race-1497614594

What a mess.

At a meeting Thursday, Toshiba’s board failed to select a preferred bidder, people familiar with the meeting said. The company has said it wants the sale wrapped up by June 28.

People in the industry involved in contract negotiations said some of Toshiba’s rivals have already agreed to price increases for next year’s contracts so they can ramp up production, while they said Toshiba has held back in some cases.

The sale has been hampered by a legal brawl with Western Digital and Japanese government opposition to a Chinese buyer.

Western Digital says its contracts with Toshiba give it the right to block any other bidder and sued this week in California state court to prevent Toshiba from selecting a buyer. Toshiba says Western Digital has no such right of refusal.

Meanwhile, Japanese government officials say they won’t let Toshiba’s technology get transferred to Chinese hands, and they have made clear privately that Foxconn, because of its extensive operations in China, would be blocked for that reason.

Even if Western Digital resolved its dispute with Toshiba and made a deal to buy the Toshiba unit, antitrust regulators in China or elsewhere might object because Western Digital already has a big share of the NAND flash memory market.

The delays are badly timed because the chip unit needs a deep-pocketed owner to fund expansion. The chip industry is in the midst of its largest growth year since 2010. NAND chips especially are hot, as consumers demand more storage in their smartphones.

One person familiar with the matter said Toshiba views Broadcom’s offer as the most attractive because the U.S. company has shown its commitment to beef up the chip unit’s production.

 

[RootCause]

So whats the best outcome for the switch, and the industry?

 

[Kanann]

Apple cock-blocking Switch for ship supplys, and got clock-block by Japan Gov. themself.

 

[Cottiny]

So whats the best outcome for the switch, and the industry?

I guess that we will have shortages of Switch (and probably many other electronic devices that aren't from big companies like Apple) for at least a year.

 

[Calm Mind]

I love being right some times.

 

[Calm Mind]

More at the link:
https://www.wsj.com/articles/toshiba-falls-behind-in-chip-development-race-1497614594

What a mess.

Called it.

I have a feeling a deal between WD and INN Japan would be favorble because of national pride. That is if they can outbid Apple and Amazon. *crosses fingers*

 

[Turrican3]

OP states Nintendo has also Samsung as a flash supplier, right?

What would prevent Nintendo (and likely other companies as well of course) to ask for a bigger number of needed parts to Samsung while the Toshiba deal finalizes? Surely it would need some time to ramp up production but other than that?

Or am I missing something? Sorry if it sounds dumb, just trying to understand.

 

[RootCause]

Apple cock-blocking Switch for ship supplys, and got clock-block by Japan Gov. themself.

Cock blocking isn't the right way to describe it. These companies are trying to sell their products. I mean, have you seen how many products apple sells? Come on!

 

[emag]

OP states Nintendo has also Samsung as a flash supplier, right?

What would prevent Nintendo (and likely other companies as well of course) to ask for a bigger number of needed parts to Samsung while the Toshiba deal finalizes? Surely it would need some time to ramp up production but other than that?

Or am I missing something? Sorry if it sounds dumb, just trying to understand.

There's a market shortage of NAND chips. Samsung doesn't have anywhere near the plant capacity to produce enough on its own, so what is produced will go to the highest bidder(s)/biggest buyer(s) and everyone else will be hosed.

It takes a lot of time and investment to build additional manufacturing plants and arrange the logistics for them.

 

[Thraktor]

I guess that we will have shortages of Switch (and probably many other electronic devices that aren't from big companies like Apple) for at least a year.

I don't expect it to have any meaningful impact on Nintendo's ability to ramp production of Switches (they already dual-source eMMC). They'll just have to pay more for the components to do so, which may push back their ability to reduce the console's price (although we're only talking a few dollars per unit here, which will likely be more than offset by cost reductions for the SoC, RAM, screen and other components).

 

[ggx2ac]

More at the link: https://www.wsj.com/articles/toshib...-as-preferred-bidder-for-chip-unit-1498015576

Toshiba Corp. said it selected a group led by the Japanese government as the preferred bidder for its memory-chip unit, a sale meant to raise about $20 billion—but a legal fight could block a final agreement.

Toshiba is trying to stay afloat after the bankruptcy of its U.S. nuclear subsidiary, Westinghouse Electric Co., left it with an estimated loss of nearly $9 billion in the year ended in March.

Toshiba said it wanted to sell the chip unit to a group that includes a state-backed investment fund called the Innovation Network Corp. of Japan as well as the government-owned Development Bank of Japan. U.S. private-equity firm Bain Capital is also part of the group, Toshiba said, and SK Hynix Inc., a South Korean chip maker, said it would join as a lender.

Toshiba said it wanted to conclude an agreement with the group by next Wednesday, the day of the company’s annual shareholder meeting.

Details of the bid weren’t disclosed. One person briefed on the offer said it totaled slightly more than ¥2 trillion ($18 billion).

Closing the deal won’t be easy. Toshiba’s chip business partner, Western Digital Corp. WDC, which says it has the right to veto any transaction, has filed a request for binding arbitration and separately asked a state court in California to block any deal. In a statement Wednesday after Toshiba’s announcement, Western Digital reiterated its claims and said it look forward to a court hearing July 14.

Toshiba said the Japanese government-led plan was the “best proposal, not only in terms of valuation, but also in respect to certainty of closing, retention of employees, and maintenance of sensitive technology within Japan.”

 

[Cow Mengde]

They are already affected by NAND memory shortages.

If Toshiba's memory unit is acquired by Foxconn it could lead to lead to new manufacturing plants like with their acquisition of Sharp. Meaning more production of NAND memory which should help ease the severity of shortages which causes manufacturing costs to rise.

Eh. Building a factory takes years. This doesn't even take into account on how long acquisitions can take. This will probably only benefit the Switch towards the middle or end of its life.

 

[Shin]

More at the link: https://www.wsj.com/articles/toshib...-as-preferred-bidder-for-chip-unit-1498015576

Here's the official statement: http://www.toshiba.co.jp/about/ir/en/news/20170621_1.pdf

 

[ggx2ac]

Eh. Building a factory takes years. This doesn't even take into account on how long acquisitions can take. This will probably only benefit the Switch towards the middle or end of its life.

Yes, I wasn't expecting a new factory in operation next year.

The point was trying to reduce NAND shortages because there are more than Smartphones and Tablets that use NAND memory now like servers.

I expect servers to increase in production as more companies are moving into IoT.

Here's the official statement: http://www.toshiba.co.jp/about/ir/en/news/20170621_1.pdf

Thanks.

 

[v1oz]

Who makes the Nintendo Switch? I thought it was Foxconn.

 

[ggx2ac]

Who makes the Nintendo Switch? I thought it was Foxconn.

Foxconn does the assembly but the parts come from different companies.

TSMC manufactures the SoC

Samsung and Toshiba manufacture the eMMC NAND flash separately.

Japan Display Inc manufactures the LCD screen.

Etc.