Apple And Amazon Back Foxconn To Buy Toshiba Chip Division, But The Bidding War Is Fierce
Foxconn wants to purchase Toshiba's semiconductor chip business and Apple and Amazon will apparently chip in to back the bid.
Should it be successful, the deal could help the two companies get better access to flash memory, likely at a more affordable price, to use in devices such as iPhones, iPads, Kindles and the likes.
Foxconn has some serious competition with at least five other bidders looking to snatch up Toshiba's chip business. At least two of those rival bidders reportedly have the support of the Japanese government, which doesn't want to see Toshiba's chips owned by foreigners.
Apple, Amazon Backing Foxconn's Bid For Toshiba Chip Business
As Nikkei Asian Review reports, Foxconn chairman Terry Gou said on Monday, June 5, that Apple and Amazon will also "chip in funds" to back up its bid. It remains unclear, however, if the support will be a direct investment in the semiconductor business or it would simply be financing for the deal.
Toshiba is the second largest NAND chip maker in the world, but it needs to sell its chip business to cover the hefty cost overruns worth billions of dollars from its U.S. Westinghouse nuclear unit, which is now bankrupt. Its memory chip business is the only one that's still profitable, and Toshiba reportedly seeks to sell it by the end of this fiscal year.
Why It Matters
If Apple and Amazon manage to get a piece of the pie in case Foxconn wins the bid, they could get a significant edge in a segment currently dominated by Samsung, Apple's archrival on the smartphone scene.
Foxconn already acquired Sharp and with Toshiba's chips under its belt as well, it could seriously compete against Samsung. Memory chips and panels are among Samsung's most profitable businesses, and Foxconn would make a fierce rival if it manages to grab Toshiba's chip business.
Competition is heating up, and Foxconn is striving to get a bigger piece of the market. Last year, the company agreed to buy Nokia's feature phone business from Microsoft. Finnish company HMD Global licensed the Nokia brand for a decade to release Nokia-branded smartphones, and Foxconn is making them.
At the same time, Gou also told the Nikkei Asian Review on Saturday that Foxconn is among the financial backers for Andy Rubin's Essential Phone, which is shaping up as a real game changer ready to shake up the smartphone scene.
However, Foxconn is not considered a frontrunner in the bidding war for Toshiba's chip business because it has solid ties with China. The Japanese government is expected to block all deals that would see Toshiba's key chip technology in foreign hands, so Foxconn might not have much of a chance to win this bidding war even with Apple and Amazon on its side.
In other words, it would be a major boon for Foxconn, Apple, and Amazon if Foxconn's bid proves to be successful, but winning the bid will definitely not be easy. It remains to be seen how things will unfold and we'll keep you up to date as soon as more information becomes available.