Foxconn says Apple, Dell
join its bid for Toshiba chip business
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[June 12, 2017]
By J.R. Wu
(Reuters) - Apple Inc and computing giant Dell Inc will join a Foxconn-led
consortium bidding for Toshiba Corp's highly prized chip unit, the CEO
of the world's largest contract electronics manufacturer told Reuters on
Terry Gou, Foxconn's founder and chief executive, said U.S.-based
Kingston Technology Co, a maker of memory products, would also be part
of the bidding group, while Amazon.com Inc was close to joining.
The Taiwanese firm is also in discussions with Alphabet Inc's Google,
Microsoft Corp and Cisco Systems Inc about their participation in
the bid, he said.
He declined to comment on the total size of the offer or say how much
Apple and other U.S. firms planned to invest.
"I can tell you Apple is in for sure," Gou said in an interview, adding
that its participation had been approved by the Chief Executive Tim Cook
and Apple's board of directors.
Toshiba is rushing to find a buyer for the world's second-largest
producer of NAND chips, which it values at $18 billion or more, to cover
billions of dollars in cost overruns at its now-bankrupt U.S. nuclear
business Westinghouse Electric Corp.
Foxconn, however, has not been seen as a frontrunner for the unit due to
its deep ties with China, where it manufactures much of its products.
The Japanese government has said it will block any deal that would risk
the transfer of key chip technology out of the country.
But Gou said that Foxconn-led consortium contained no Chinese capital
and had the advantage of not inviting as much antitrust scrutiny as
"The key is that we are all customers, we are users," he said.
Foxconn, formally known as Hon Hai Precision Industry Co, and its
Japanese unit Sharp Corp would have a combined stake of not more
than 40 percent, he added.
Representatives for Apple and the other U.S. firms named by Gou could
not be immediately reached for comment outside of regular business
hours. Sharp declined to comment.
Gou's revelations of the Foxconn-led bid come as uncertainty spikes over
the make-up of the groups bidding in the hotly contest auction just days
before Toshiba is due to announce a preferred bidder.
[to top of second column]
Terry Gou, founder and chairman of Foxconn reacts during an
interview with Reuters in New Taipei City, Taiwan June 12, 2017.
Western Digital Corp plans to raise its offer for Toshiba's semiconductor unit,
a person familiar with the matter told Reuters over the weekend, in a last-ditch
effort to clinch a deal.
The U.S. chipmaker is part of a consortium led by a Japanese government-backed
fund and the group will present the new offer of 2 trillion yen ($18 billion) or
more, the source said.
The laptops-to-nuclear conglomerate aims to name a winner for at a board meeting
on June 15. Tokyo, however, has been asking Toshiba to postpone the decision as
the government-led consortium has yet to finalise its proposal.
sources have said that the state-backed fund, the Innovation Network Corp of
Japan, is also exploring a potential consortium with Bain Capital, though it is
unclear what other firms would also be members of that group.
Western Digital has been seen by some sources as crucial to successful deal, as
it jointly operates a key flash-memory chip plant with Toshiba in western Japan.
But Western Digital and Toshiba have been at loggerheads over the auction.
Western Digital is pursuing an international arbitration claim that Toshiba has
breached joint-venture contracts by entertaining outside bids.
Toshiba has favoured a separate bid from U.S. chipmaker Broadcom Ltd <AVGO.O>,
which has partnered with U.S. private equity firm Silver Lake to offer 2.2
trillion yen, people familiar with the matter have told Reuters.
(Reporting by J.R. Wu in Taipei; Additional reporting by Makiko Yamazaki and
Taiga Uranaka in Tokyo; Editing by Edwina Gibbs)
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