Broadcom tipped to win Toshiba memory business

June 07, 2017 // By Peter Clarke
Toshiba Ltd. (Tokyo, Japan) has decided to negotiate with semiconductor company Broadcom Ltd. (Singapore) on the disposal of Toshiba's memory business, according to the Asahi Shimbun newspaper, which referenced unnamed sources.

Broadcom has teamed up with US private equity firm Silver Lake Partners and is said to have bid 2.2 trillion yen (about $20 billion) and promised to make continued investments in the memory IC manufacturing business. Toshiba's memory business was expected to sell for before 1.5 and 2.0 trillion yen.

The choice of Broadcom will leave several other companies and groups out in the cold including: Foxconn with the potential support of Apple; rival memory maker SK Hynix of South Korea; a Japanese-US consortium linked to the state-backed Innovation Network Corp. of Japan; and Western Digital.

Western Digital has been a partner of Toshiba's on the production of NAND flash but fell out with Toshiba over how it was handling the sale of the memory business (see Western Digital tells Toshiba it is not free to sell ). Western Digital, which has a manufacturing relationship with Toshiba, felt that it should be given first refusal on the acquisition of the memory business.

Toshiba is trying to sell off what is now called Toshiba Memory quickly to raise cash to cover a massive write down in its nuclear power business.

It has been rumoured that the Japanese government would prefer a bid from a US entity rather than one from South Korea, China or Taiwan. Broadcom is officially headquartered in Singapore but has a long history as a US semiconductor company and is listed on Nasdaq.

Broadcom predominantly sells chips for communications and – if its bid is successful – this will be a move into non-volatile memory market and towards consumer electronics where NAND flash is used in smartphones and many other mobile devices.

This is seen as an advantage, the report said, as it will likely reduce the time taken to agree the sale because anti-monopoly regulations should not come into consideration. The report said Toshiba had been negotiating with Broadcom since the beginning of June.

Western Digital filed