Toshiba narrows bidders for memory business, may have dropped Apple

Posted:
in General Discussion edited April 2017
Toshiba has reportedly shrunk the group of bidders for its memory business from about 10 to a number that may no longer include Apple, though no binding offers have been made, and more bidders could potentially join.




Several Apple-connected suppliers are still in the running, according to Bloomberg sources. These include assembly partner Hon Hai/Foxconn, memory maker SK Hynix, and Broadcom, the last in partnership with private equity firm Silver Lake Management.

Broadcom has been rumored as collaborating with Apple on new wireless charging technology that could premiere as soon as this year's iPhones, though a delay until later generations is possible.

Offers for the memory business have so far come in around $18 billion, the Bloomberg sources said. The Japanese government is expected to oppose any sale to Foxconn or SK Hynix on national security grounds, and indeed Toshiba will allegedly encourage Japanese companies to submit bids.

Although Toshiba's memory business is actually very successful and one of the biggest in the world, the company is selling off a majority stake to cope with over $9 billion in losses from its U.S. nuclear division, Westinghouse. That firm entered into Chapter 11 bankruptcy last week.

As recently as Monday Apple, Amazon, and Google were all rumored to be bidders, and it's not clear which if any of them might still be in contention.

For Apple controlling Toshiba's memory business would give it a steady supply of memory for Macs, iPhones, and other devices, which it might even been able to optimize like its A-series processors or W1 wireless chip. Conversely, it would suddenly have to cope with legacy clients and/or step into the wider memory industry, something Apple management is probably unwilling to do.

Allowing one of its suppliers to make the investment would eliminate obligations but still potentially lower costs and ensure good supply.

Comments

  • Reply 1 of 10
    maestro64maestro64 Posts: 3,904member
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    randominternetpersonafrodripscooter63stantheman
  • Reply 2 of 10
    blastdoorblastdoor Posts: 1,743member
    Somewhat related to this is the question of whether it makes sense for Apple to ever buy or build its own fabs. It probably doesn't.... but that's not 100% obvious due to Apple tremendous size.

    There was a time when a fully integrated computer company like the old IBM or DEC would fab their own chips entirely for their own use. But those companies grew slower than the cost of building fabs, and so didn't have the economies of scale to keep chip manufacturing as a part of their vertically integrated structure. 

    But in the last 10 years Apple has grown faster (much faster, in fact) than the cost of building fabs, to a point where they might be operating at such a scale that totally internalizing chip production is warranted. 

    Maybe the thing that makes is unlikely for Apple has more to do with their management structure than their scale. 
    randominternetperson
  • Reply 3 of 10
    I would be curious on why you would put "may have dropped Apple" in the title as there is not indication that this is the case.
    danh
  • Reply 4 of 10
    maestro64 said:
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    Do you think that Amazon or Google would be more suited for buying Toshiba than Apple? Everyone thinks Jeff Bezos is a genius and I'll bet his company's investors aren't questioning his bidding for Toshiba and I doubt he'd care if they did. Do you know why Amazon has a P/E of 150 and Apple has a P/E of 17? Because Wall Street's greedy big investors prefer companies whose CEOs have balls. It's not that I trust Wall Street much, but usually whatever Amazon does is praised to high heaven while whatever Apple does is always considered a huge mistake. Maybe Apple has to do something unusual to boost its testosterone levels and get some investor respect.
  • Reply 5 of 10
    I would be curious on why you would put "may have dropped Apple" in the title as there is not indication that this is the case.


    Probably because it's technically true and because it will cause us to read the article.  You could update all these articles and add "also Telsa and McDonalds MAY be..." they would be true statements.

    Apple may (or may not) have been a bidder.  Apple may (or may not) have just been winnowed out.

    Yawn.

  • Reply 6 of 10
    maestro64 said:
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    Do you think that Amazon or Google would be more suited for buying Toshiba than Apple? Everyone thinks Jeff Bezos is a genius and I'll bet his company's investors aren't questioning his bidding for Toshiba and I doubt he'd care if they did. Do you know why Amazon has a P/E of 150 and Apple has a P/E of 17? Because Wall Street's greedy big investors prefer companies whose CEOs have balls. It's not that I trust Wall Street much, but usually whatever Amazon does is praised to high heaven while whatever Apple does is always considered a huge mistake. Maybe Apple has to do something unusual to boost its testosterone levels and get some investor respect.

    Fortunately, the goal of Apple is to make great products that people love and not to maximize the stock price.  Since they are great at the former, they are the most valuable company in the world.  Should Apple be worth 7 trillion dollars instead of 700 billion dollars?  Probably not.
  • Reply 7 of 10
    mattinozmattinoz Posts: 687member
    maestro64 said:
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    Doesn't that depend if you see Apple as the computer company or a massive managed fund of cash like securities?

    The cash like securities could be invested in all sorts of interesting things and there be no reason for that not to be involved in this bid as a backer.
    edited April 2017
  • Reply 8 of 10
    maestro64maestro64 Posts: 3,904member
    maestro64 said:
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    Do you think that Amazon or Google would be more suited for buying Toshiba than Apple? Everyone thinks Jeff Bezos is a genius and I'll bet his company's investors aren't questioning his bidding for Toshiba and I doubt he'd care if they did. Do you know why Amazon has a P/E of 150 and Apple has a P/E of 17? Because Wall Street's greedy big investors prefer companies whose CEOs have balls. It's not that I trust Wall Street much, but usually whatever Amazon does is praised to high heaven while whatever Apple does is always considered a huge mistake. Maybe Apple has to do something unusual to boost its testosterone levels and get some investor respect.

    Actually Wall Street despises CEO's with Big Balls, they like CEO's they can manipulate or does that they want. Steve Job was know to be the biggest ass on the planet, took all kinds of risks and Wall Street never reward Apple with a High PE, why they hated Steve since Steve use to tell them to f-off and he would run his business in a way he felt was best for him and the customers. In this case Bezos plays to Wall Street and turns no profits, eventually you have to cover your costs and Amazon assumes people will never step out of their house to shop.
  • Reply 9 of 10
    maestro64maestro64 Posts: 3,904member
    sog35 said:
    maestro64 said:
    It does not make sense for Apple to be in the bidding directly, running a memory design and fab business is way outside Apple core competence. I suspect Apple may be backing one of this memory partners to make sure Toshiba's memory falls in to Apple friendly hands. 
    Do you think that Amazon or Google would be more suited for buying Toshiba than Apple? Everyone thinks Jeff Bezos is a genius and I'll bet his company's investors aren't questioning his bidding for Toshiba and I doubt he'd care if they did. Do you know why Amazon has a P/E of 150 and Apple has a P/E of 17? Because Wall Street's greedy big investors prefer companies whose CEOs have balls. It's not that I trust Wall Street much, but usually whatever Amazon does is praised to high heaven while whatever Apple does is always considered a huge mistake. Maybe Apple has to do something unusual to boost its testosterone levels and get some investor respect.
    Amazon is no doubt overpriced. But they are growing revenue at about 20%, while Apple had shrinking revenue last year.

    Seriously speaking, I think Cook could learn some lessons from Bezos. IMO, Tim Cook is to risk adverse. Take some risks. Yes you will miss. But even if you only succeed 1 out of 10 times that is still huge.  Look at Bezos. He tried Cloud, Fire Phone, Echo, ect. So far only one has worked, but it has worked out huge.  Apple should do the same.

    IMO, Apple should buy Twitter and Nintendo. Get into gaming and social. Buy some cloud companies. Even buy Disney as long as ESPN is spun off.


    Twitter is a failure, has not figure out how to monetize itself. Gaming is a niche market, yes people play games but they come an go all the time, nothing has staying power except among the game geeks, and Apple is not into Geeks.

    You and many assume Apple is not taking risk, they are most likely taking risks all the time they probably kill off more project in a year than Amazon failed at in its life time and definitely more than google kills or has failure at.

    I worked in R&D and I know what goes in companies like Apple, There are lots of ideas which get worked on and never see the light of day.  Therefore you do not need to buy a company to take risks. The only reason to buy something is either take out the competition or accelerate your own R&D efforts, Apple is obviously not interested in eliminating the competition, and we know they buy companies to accurate what they are already doing. The real difference is Apples failure are not as public as their competitors.

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