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[Newsmaker] Korean, Chinese chipmakers raise stakes on Toshiba

Chipmakers from South Korea, Taiwan and China are beefing up moves to acquire the NAND Flash business of Japan’s cash-strapped Toshiba in their quest to spearhead the global NAND market.

According to the semiconductor and financial industries Thursday, global chipmakers are doubling efforts to take over Toshiba’s NAND business after it was reported earlier this week that the financially troubled Japanese company will sell a majority stake in the NAND business

Toshiba aims to raise about 1 trillion yen ($8.77 billion) and complete the sale by April 1, Japan’s Nikkei recently reported. 

Until last month, Toshiba had announced a sale of a maximum 20 percent stake in the unit to secure cash to underwrite several billion dollars on its US nuclear power business.

As of Feb. 3, at least four globally known chipmakers and two private equity funds offered their bids for the Toshiba unit. They are US-based Western Digital and Micron Technology, Korea’s SK hynix, Taiwan’s Foxconn, Bain Capital and Silver Lake, according to media reports. Due to time constraints and the impending write-down, the Japanese firm was going to select a preferred bidder in mid-February, but it changed its plan as its financial situation became worse.  Meanwhile, China’s Tsinghua Unigroup and US iPhone maker Apple reportedly have joined the bidding.

(The Investor)
(The Investor)

As WD is a longtime partner of Toshiba, it was said the US chipmaker would be the most likely candidate. But over time, some Asian companies have started moving more proactively to snatch up the lucrative business.

SK hynix, which offered about 3 trillion won ($2.62 billion) to buy a 20 percent stake in the Toshiba unit last month, is reportedly making a new bid worth about 10 trillion won to purchase an up to 50 percent stake. However, it has not yet officially announced its bid.

“To tell the truth, SK hynix is pretty good with the DRAM business,” said an industry insider. “But there have been some voices within the company that they need to seek change by taking the challenge. The company’s ambition for the NAND market seems strong.”  

The NAND chip market is forecast to grow up to $46 billion by 2020 due to soaring demand for the chips as they are increasingly adopted for the Internet of Things, cloud and big data services for long-term storage. 

SK hynix is the second-largest DRAM chipmaker in the global market after Samsung Electronics.  But it is the fifth player in the NAND Flash market. The company could become the world’s No. 2 NAND chipmaker if it owns the Toshiba unit.  

“We can’t confirm anything about the ongoing deal,” said a spokesman at SK hynix. “As our CEO has said, we will consider bidding again if there is an offer.”

On Feb. 23, SK hynix CEO and Vice Chairman Park Sung-wook hinted at the chipmaker’s intention to acquire more stakes in Toshiba’s chip business adding to its earlier bid.

A strong rival of the Korean chipmaker in the Toshiba bidding is said to be Taiwan’s Foxconn.

According to Singapore-based Channel NewsAsia on Wednesday, Foxconn’s founder Terry Gou said the company is “definitely bidding” for the Toshiba business and is “very confident” that it can buy into it.

China‘s Tsinghua Unigroup that is currently building chip plants in several parts of the country by making nearly $70 billion investment is also rising as a competitor.

However, due to concerns about technology leaks and other regulatory issues, it is less likely that Japanese authorities would approve a Chinese bidder, financial analysts say.

“Chinese companies’ increased presence in the global semiconductor market could be threatening to Korean businesses,” said Lee Jeong, an analyst at Eugene Investment & Securities. “If a Chinese chipmaker wins the deal, the result on Korean chipmakers would be negative.”

By Song Su-hyun (