Japanese conglomerate Toshiba has missed the deadline for selling its chip business. The self-induced deadline will be extended while the company weighs offers from three separate groups of investors: Western Digital, FoxConn, and Bain Capital.
Toshiba already attempted to seal the deal with Bain Capital back in June but was forced to back out at the last minute due to mounting legal pressure from Western Digital.
Western Digital, an American digital storage company, jointly owns Toshiba’s NAND production plant in Japan. When Toshiba reached an agreement with Bain Capital, Western Digital threatened legal action, arguing that Toshiba could not sell its chip business to a third party without Western Digital’s consent.
Western Digital is backed by KKR, one of the largest private equity firms in the world. KKR co-CEOs Henry Kravis and George Roberts have been silent on the issue thus far.
According to Bloomberg, Bain submitted a 2.1 trillion yen ($19 billion) offer alongside other investors, including the Development Bank of Japan and the state-backed Innovation Network Corp. of Japan. Apple is currently in talks with Bain Capital to submit yet another bid.
Apple relies on Toshiba for its flash memory chips, which are used in Apple’s iPhones and iPods. Michael Walkley, an analyst with Canaccord Genuity, believes that Apple is trying to obtain a continual supply so that it doesn’t have to rely on its competitor, Samsung.
“There are supply shortages of that type of memory,” Walkley told Bloomberg. “They’re always looking to work closely with key suppliers and lock in long-term supply agreements.”
But there’s still another player in the race: FoxConn. Based in Taiwan, FoxConn is a contract manufacturing company that produces electronics on behalf of Apple and other leading tech companies. Terry Gou, CEO and founder of Foxconn, didn’t disclose the exact amount of his offer. However, he did say that it was “very close” to other bids.
While it’s still unclear which company will end up acquiring Toshiba’s chip business, one thing is for sure: whoever it is will own a large chunk of a very lucrative and niche industry.
