14 DAY TRIAL // Toshiba just announced that a deal has been reached to sell a part of its company responsible for making flash memory chips to a consortium of companies that include Bain Capital and Apple.
It’s no secret that Apple is getting its memory chips from Samsung, and the fact that only Samsung can provide a large enough quantity puts it in a very strong position. This is where the Toshiba transaction becomes really important, not just because of the huge sum of money involved, but because it changes who things work in the market.
Toshiba is a bad place right now, and it’s bleeding money. The company used to be a leader in a number of technologies, but it overextended or remained behind. In any case, Toshiba needs an influx of funds, and selling off a part of the business is probably the only way to get it.
Changes won’t happen overnight
According to Bloomberg, the buyers for the memory chip business is actually a group made of Bain Capital, Dell, SK Hynix, and Hoya Corp. Toshiba still owns a stake, so they are not leaving completely, but they are getting $18 billion, so it seems like a good deal.
Even though the announcement made it sound like it’s happening, it’s also possible that Toshiba’s partner, Western Digital, will try to stop the company from selling out. There are some problems to work out between the two companies, and it might take a while to work out.
In the meantime, Apple is now happy to secure an alternative supplier of flash memory. Buying from a single company leaves them open, but now they have a new bargaining chip. It might also be possible for Apple to completely move to Toshiba for its needs. The worst idea would be to have two types of iPhones on the market, one with hardware from Samsung and the other from Toshiba.