Toshiba NAND Flash Memory Chip Up for Sale... Will Japan Rise to the Bidding Occasion or will Foxconn and International Bidders Gain a Crown Jewel?
Fujio Masuoka, an engineer at Toshiba invented the technology behind its chip business, known as flash memory after joining the company in 1971. That innovation would become one of the critical building blocks of the modern electronics industry. Toshiba’s microchips, a type known as NAND flash memory, are seen as a more valuable asset than TV screens. Japan — despite having pioneered liquid crystal displays — has lost most of its market share in screens to South Korea and China.
Flash memory chips have become an essential part of smartphones and other gadgets and have proved a profitable technology for Toshiba, one of industrial Japan’s stalwarts in their postwar rise as a global industrial giant. Unfortunately, Toshiba is financially struggling after losses associated with Westinghouse Electric, its troubled nuclear power arm that filed for Chapter 11 bankruptcy protection in may 2017 after writing off 6 Billion in February. Toshiba announced that it hoped a sale of its microchip business, its crown jewel, could alleviate the uncertainty of their financial security.
The chip sale is still in the very early stages and their are many predictions on who could purchase the technology. One of the better-known suitors is Hon Hai Precision Industry, also known as Foxconn, the assembler of Apple iPhones and other electronics. Other potential investors include the American microchip makers Western Digital and Broadcom, and SK Hynix of South Korea. Most potential buyers are foreign to Japan.
For Foxconn, an investment in Toshiba would be the second recent foray into the often politically fraught world of corporate Japan. Last year the company acquired control of Sharp, the maker of flat-screen television displays, for $3.5 billion. In doing so it overcame a rival bid from an investment fund backed by the Japanese government. In an effort to keep the development of such innovative technologies within Japan, in the past, smaller companies have teamed with the Japanese government to invest in tech companies with dicey financials.
Japanese politicians and industry leaders have fretted over Chinese investors’ buying advanced chip production technology; semiconductors and memory are a major priority of China’s industrial policy because they can fabricate the technology at a lesser cost and go after market share, which would hurt other international tech industry players. Such a move could drive down pricing for memory, a boon for Apple and low-cost Chinese smartphone makers. It would propel China forward in its long push to become internationally competitive in semiconductors.
A global bidding war would at any rate be good for Toshiba, especially since bids are ranging between 2 and 3 trillion Yen. Although the company still has a relatively strong position, competition in NAND chips could create the possibility of oversupply and put more pressure on Toshiba’s ability to put in effect next-generation technologies.
Although tech development requires collaboration the divide in politics causes developers, manufactures and their homeland governments to keep international companies at bay. However, some of the biggest tech companies consistently drive to become global giants that break boundaries and contract deals that expand their company reach in the international market, not just a product.
When creating a business and a product it is essential to keep the global market in mind and use it for positive benefit, our world reach is forever expanding.
Would you sell the production of your most valuable product to a competitor?
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