Foxconn hoping to bite into Toshiba’s chips with Amazon, Apple partnership
June 06, 2017
Terry Gou, founder and CEO of electronics manufacturer Foxconn, has secured the support of Amazon and Apple in its effort to acquire the chip business of ailing Toshiba. Foxconn, Apple’s longtime manufacturing partner on the iPhone and Amazon’s contract manufacturer on the Kindle and Echo, faces two significant challenges to its bid: A formidable set of competitors and opposition from the Japanese government. But backing from Amazon and Apple helps Gou on both fronts.
The NAND flash memory chip is widely considered a cornerstone in the development of AI and IoT tech—no small prize and not one that Japan wants to see in the hands of an Asian rival. Little wonder, then, that the target is expected to command bids north of Foxconn's ¥2 trillion (about $18 billion) offer, per Nikkei Asian Review, from three other consortia, each featuring a significant PE partner: Broadcom and Silver Lake, Western Digital and KKR, and SK Hynix and Bain Capital.
However, Taiwan’s Foxconn, which picked up Japan’s Sharp last year for roughly $3.5 billion, can leverage not only capital from Amazon and Apple, which boast a combined market cap of about $1.3 trillion, but also their reputations to assure the Japanese government that Toshiba’s chips remain in good hands.