Foxconn founder Terry Gou has said that he has won the financial backing of Apple and Amazon in its $20bn-plus bid for Toshiba’s flash memory business, as the Taiwanese group aims to counter Japanese government opposition to the deal.
In an interview with the Nikkei business daily on Sunday, Mr Gou said that the two US tech groups are joining hands with Foxconn, which is listed as Hon Hai Precision Industry. Toshiba is looking to clinch a deal on the sale of its chip division by the end of this month as the Japanese industrial group grapples with huge losses arising from its US nuclear business.
“Of course Apple and Amazon are offering money together, but I cannot comment on how much funds each company is putting on the table,” Mr Gou told the Nikkei.
In a separate statement, Foxconn said it had submitted a bid for Toshiba’s chip business with “a number of strategic partners”, but the company declined to provide further details. Amazon declined to comment and Apple was not immediately available for comment.
People involved in the sales process said that Foxconn, which also acquired Japan’s Sharp last year, has been studying a joint bid with Apple, potentially using a $93bn investment fund that was recently launched by SoftBank, the Japanese technology group.
Analysts say demand for NAND flash memory chips, used for long-term data storage for smartphones and other devices, is expected to increase on the back of a boon in data centres for technology companies such as Amazon, Google and Apple in the age of artificial intelligence and internet of things.
The Taiwanese group has earlier indicated that it would be willing to pay up to ¥3tn ($27bn) for the NAND memory chip business, making it the lead contender in terms of offer price.
But the deal has become politically fraught and Toshiba may not secure the highest possible price amid Tokyo’s concerns about the company’s flash memory technology falling into rival Asian hands. Government officials have privately expressed concerns about Foxconn’s bid, in particular due to its close ties with China.
While Foxconn’s tie-up with the Silicon Valley groups may help to ease some political concerns, analysts say Mr Gou will still face an uphill battle to convince Japanese government officials who have worked the behind the scenes to promote a Japan-US consortium.
These officials envision putting Toshiba’s chip business under the control of the state-backed Innovation Network Corporation of Japan fund, which is weighing a joint bid either with US private equity fund KKR or US chipmaker Western Digital, according to people involved in the talks.
Other contenders include US private equity firm Bain Capital, which is partnering with South Korean chipmaker SK Hynix, and US chipmaker Broadcom, which has been working with private equity firm Silver Lake.
Source: Financial Times
