Hon Hai reportedly one of four bidders for Toshiba IC assets

Taipei--Taiwan-based manufacturing giant Hon Hai Precision Industry Co. (??) has become one of four bidders eyeing Toshiba Corp.'s memory chip assets after the financially troubled Japanese firm narrowed down the potential buyer list, Japan's Yomiuri Shimbun newspaper reported Thursday.

Yomiuri cited unnamed sources as saying that following the end of the first round of bidding in late March, Toshiba picked four: Hon Hai, South Korea's memory chip maker SK Hynix Inc., U.S.-based computer data storage supplier Western Digital Corp. and integrated circuit designer Broadcom Ltd.

The sources said that Toshiba is expected to enter talks with the four potential buyers on acquisition prices and how to retain the employees after the deal before the company makes a decision on the buy-out deal.

According to the report, Broadcom has partnered with private equity firm Silver Laker Partners to bid for the Toshiba IC business.

In February, Toshiba's board of directors approved a proposal to spin off its semiconductor operations under the name of Toshiba Memory.

Toshiba had planned to dispose of a 19.9 percent stake in Toshiba Memory but is likely to let go of it completely in an effort to cushion the heavy losses in its nuclear power business in the U.S. market, according to recent Japanese media reports.

The Toshiba Memory sale attracted strong interest among potential bidders in Taiwan, the U.S. and South Korea, the reports said.

Before the Yomiuri report, the Asahi Shimbun, another Japanese daily, said last week that Hon Hai has offered almost 3 trillion Japanese yen (US$27.52 billion) to acquire Toshiba's memory chip assets, making the Taiwanese firm the largest bidder in the race.

According to the Asahi Simbun report, Broadcom has offered more than 2 trillion yen for Toshiba's memory chip assets.

However, cited sources close to the deal as saying that Broadcom was the largest bidder rather than Hon Hai in the first round of bidding, putting up 2.5 trillion yen on the table ahead of Hon Hai's 2 trillion.

In addition, both the Asahi Shimbun and the Nihon Keizai Shimbun, another Japanese daily, said that Western Digital has asked Toshiba to give it the exclusive right for negotiations on the deal after it warned the Japanese firm that without the exclusive right, the Japanese firm could violate a joint venture contract.

Western Digital and Toshiba have already set up a semiconductor joint venture in Japan's Mie Prefecture so that a move for the Japanese firm to transfer its memory chip assets to a third company without Western Digital's consent could be a serious breach of the cooperation agreement.

Hon Hai, which acquired a 66 percent stake in Japan's Sharp Corp. for US$3.5 billion in August 2016, is believed to want to expand beyond contract manufacturing into the semiconductor business.

Source: Focus Taiwan News Channel