Foxconn receives backing from tech giants in Toshiba race

Jun 12, 2017 11:29 GMT  ·  By
The world's largest tech companies are said to be interested in backing Foxconn
   The world's largest tech companies are said to be interested in backing Foxconn

Foxconn, the number one electronics manufacturer in the world, is receiving financial support from a number of large tech companies, including Apple, Dell, and Kingston to take over Toshiba’s chip unit, according to CEO Terry Gou.

Furthermore, the consortium of firms interested in the Toshiba takeover will also include several other big names, like Google, Microsoft, and Cisco, Gou explained in a statement for Reuters, and right now the negotiations are in the phase where the companies are discussing their participation in the bid.

“I can tell you Apple is in for sure,” Gou was quoted as saying, adding that CEO Tim Cook and Apple’s board of directors have already approved Cupertino’s participation in the bid.

No tech company whose name is involved in the report provided a statement on this, but on the other hand, the Foxconn CEO explained that the plan is for his company and the Japanese unit Sharp to own a maximum stake of 40 percent in Toshiba’s chips unit.

People familiar with the matter said the Japanese government specifically required that a specific party to have a maximum of 40 percent share in the company, so the remaining 60 percent could go the tech corporations that are also participating in the bid. Apple, however, was interested in taking over 20 percent of the company or even more, previous reports indicated.

Why everyone wants to take over Toshiba

Toshiba’s unit manufactures NAND chips, and most of the companies that are seeking a bid, including here Apple, are said to be mostly interested in securing part of the production in anticipation of new product launches.

Apple, for instance, has always experienced component shortage when new iPhones launched, and taking over Toshiba could help the firm prepare flash storage chips supplies for the future generation models.

At the same time, all these companies are seeking reduced research and production costs, though prices are expected to drop only slightly if the deal goes through.

For the moment, there is no official announcement in this regard, but with negotiations advancing at such a fast speed, it’s probably only a matter of time until Foxconn and its allies take over Toshiba.